Paulson reassures clients on Goldman deal, no exits yet

April 21, 2010

FINANCIAL/   By Svea Herbst-Bayliss
   BOSTON, April 20 (Reuters) – Clients with Paulson & Co, which was involved in a mortgage deal that prompted civil fraud charges against Goldman Sachs <GS.N>, spoke with the manager on Monday, but so far no one has notified the firm of plans to leave his fund, several investors said. 
   “We are interested in buying out people who want to get out of Paulson but so far no one has stepped forward,” one of the investors, who asked not to be named because of the sensitivity of the matter, said on Tuesday evening.
   “I just spoke with someone from Paulson’s investor relations team this evening and there isn’t anyone who has said that they want to get out,” he added.
   After holding a conference call on Monday, the $32 billion hedge fund sent a sent a letter to clients late on Tuesday. A Paulson & Co spokesman declined to comment on the matter.
   Paulson & Co, which earned $15 billion by correctly betting in 2007 that the housing market would collapse, has come under a cloud since U.S. securities regulators on Friday accused Goldman Sachs of misleading investors by failing to say that the hedge fund was betting against a Goldman mortgage deal it had also been instrumental in helping the bank set up.
   John Paulson, who personally earned nearly $4 billion from his housing bets, told investors that neither he nor anyone else at the firm had received a so-called Wells notice indicating that charges might be filed, the people who listened said.
   New York-based Paulson & Co has not been charged with any wrongdoing but investor nervousness grew over the weekend, prompting the 16-year old firm’s founder to host a conference call on Monday where dozens of people participated.
   Concerns mounted that the government’s probe might widen to possibly include other players or that the Paulson & Co might be consumed by battling the whiff of wrong-doing.
   The hedge fund firm has been one of the most profitable in the $1.5 trillion hedge fund industry in recent years.
   The Wall Street Journal reported that some of Paulson’s clients are indicating they may withdraw money. [ID:nN20145922]
   Anyone wanting to exit Paulson’s funds must stick to the normal time schedule and notify the firm by next April 30, 60 days before the end of the second quarter.
   One investor who listened to the call said he reversed his plans to exit after hearing John Paulson calmly lay out his bet on the conference call. (Editing by Lincoln Feast) ((; +1 617 856 4331; Reuters Messaging:
Wednesday, 21 April 2010 03:26:23RTRS [nN20148074] {C}ENDS

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