A former senior official at Moody's Corp on Friday said he did not know hedge fund manager John Paulson was shorting a Goldman Sachs derivatives product when he was rating it.
The former managing director of Moody's structured finance group was asked about the rating at a Senate hearing that revealed disputes between Goldman and the agencies over rating the debt product, known as ABACUS.
I did not know that. I'm fairly sure that my staff did not know either, said Eric Kolchinsky, the former Moody's executive. Yes, that is something I personally would have wanted to know.
In its civil fraud lawsuit filed earlier this month, the Securities and Exchange Commission alleged that Goldman failed to tell clients that complex mortgage-related securities they were buying had been created by billionaire hedge fund investor Paulson, who stood to benefit if the securities lost value. Paulson has not been charged.
(Reporting by Kim Dixon; Editing by Phil Berlowitz)