Sullivan and A&O take key roles in Goldman Sachs fraud action

April 19, 2010 Until now, US regulators have not initiated actions against those who capitalised on the collapse of the US housing market. The first such action was brought on Friday by the US Securities and Exchange Commission, who filed a civil suit accusing Goldman Sachs of securities fraud.

The suit alleges that Goldman Sachs was paid to structure a collateralised debt obligation (‘CDO’) in such a way that it was secretly destined for failure, so that other investors lost almost $1 bn on the CDO, while a Goldman client earned almost $1 bn by betting against it.

The Securities and Exchange Commission has also named Goldman vice-president Fabrice Tourre as a defendant. Tourre helped create and sell the mortgage investment, and was one of a handful of Wall Street traders that profited from betting against bad debt that banks bundled for investors.

Sullivan & Cromwell partner Richard Klapper is representing long-time client Goldman Sachs in the suit. Tourre is represented by Allen & Overy partner Pamela Chepiga.

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