ACA Financial Guaranty Sues Goldman Sachs, Claims Fraud

Bond insurer ACA Financial Guaranty Corp. is suing Goldman Sachs Group Inc. alleging fraud and unjust enrichment in connection with a synthetic collateralized debt obligation called Abacus 2007-AC1.

Published on January 7, 2011

Goldman, Sachs & Co. developed and sold the CDO on behalf of hedge-fund client Paulson & Co. in 2007, according to the complaint filed by ACA today in New York state Supreme Court in Manhattan.

“This fraud action arises from the egregious conduct of Goldman Sachs,” according to the complaint. ACA claimed the CDO was “designed to fail so that Paulson could reap huge profits by shorting the portfolio and Goldman Sachs could reap huge fees.”