NEW YORK–John Paulson's hedge fund will have to defend claims that his firm conspired with Goldman Sachs Group Inc to fraudulently induce a bond insurer to guarantee payments on risky debt, court papers show.
Bond insurer ACA Financial on Thursday filed an amended complaint naming Paulson & Co and its hedge fund Paulson Credit Opportunities Master II Ltd as defendants in a $120 million lawsuit it brought against Goldman in 2011.
The lawsuit centers on a collateralized debt obligation known as Abacus, which ACA claimed was designed to fail so that Paulson could reap "huge profits" and Goldman "huge fees."
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