DealZone

Read Goldman Sachs’ Abacus pitch book

April 16, 2010

Here’s Goldman Sachs’ pitch book for ABACUS, the synthetic collateralized debt obligation at the heart of the SEC charges. The SEC alleged that Goldman structured and marketed ABACUS to hinge on the performance of subprime residential mortgage-backed securities. It alleged that Goldman did not tell investors “vital information” about ABACUS.

Abacus 2007-Ac1 Flipbook 20070226

Comments
5 comments so far | RSS Comments RSS

1. as the manager wouldn’t ACA have to provide reporting to all investors including the equity investors and shouldn’t it have noticed that Paulson weren’t anywhere in the capital structure
2. where was the Trustee in this deal – in ABs doesn’t the trustee have a fiduciary obligation to noteholders…why are trustees not being scrutinised like all the other parties

Posted by ABSskeptic | Report as abusive
 

For a better understanding of subprime mortgage-backed credit derivatives, visit:

http://donovanlawgroup.wordpress.com/201 0/02/19/how-credit-derivatives-brought-t he-u-s-economy-to-the-brink-of-a-second- great-depression/

Posted by BrianJDonovan | Report as abusive
 

Goldman has been slashed as an evil organization due to the SEC lawsuit, but perhaps a better understanding of the ABACUS deal will help explain what GS was and wasn’t responsible for providing to investors.

Have a look at the unbiased slice of the story at:

http://www.diamondslice.com/2010/04/the- abcs-of-goldmans-abacus/

Posted by TraderRob | Report as abusive
 

The cover of this flipbook tells the prospective investor all he needs to know. Any derivatives-savvy gambler knows a Synthetic CDO is exactly one thing: tranched Credit Default Swaps. A CDS is by its nature a contrarian position–you buy one because you think the underlying derivative is going to go into default; the instrument pays you nothing if the underlying doesn’t default. Also remember: the Abacus Synthetic CDO was tranched Naked CDS–the kind you buy on derivatives you don’t personally own, but think are going to default anyway.

So…Goldman, Sachs was betting the mortgages at the bottom of the derivative stack were going to default (which they did, and at such a rate the counterparties betting against the naked CDS weren’t able to make them good), and people are upset because GS was right? Well, of course they are; everyone knows the stock market only goes up!

Posted by jmowreader | Report as abusive
 

Gives new meaning to “Death by Powerpoint”

Posted by DougLeMoine | Report as abusive
 

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