The SEC said Goldman failed to tell investors that a major hedge fund had helped put together the controversial financial product known as collateralised debt obligation (CDO) and was at the same time betting against it.
Paulson & Co, one of the world's largest hedge funds, paid Goldman Sachs to structure a transaction in which it could take speculative positions against mortgage securities chosen by the fund, the commission said in a statement. The news hit sentiment on concerns the US Securities and Exchange Commission conduct a wider crackdown on those that bet on the collapse of the housing market.