Goldman Faces Suit Over Timberwolf Deal

Now, Goldman Sachs may have to deal with another lawsuit from a bunch of blokes at an Australian hedge fund. Goldman has been tussling behind the scenes with lawyers from the firm, called the Basis Yield Alpha Fund, over a $100 million slice of the Goldman-sponsored Timberwolf CDO that the Aussies bought right before the shit hit the fan.
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Update 12:49 pm: The Aussies have filed suit against Goldman seeking $56 million in losses and $1 billion in punitive damages.

The Crisis commission is up their ass, the SEC’s civil suit is lingering and the pundits won’t let up.

Now, Goldman Sachs may have to deal with another lawsuit from a bunch of blokes at an Australian hedge fund. Goldman has been tussling behind the scenes with lawyers from the firm, called the Basis Yield Alpha Fund, over a $100 million slice of the Goldman-sponsored Timberwolf CDO that the Aussies bought right before the shit hit the fan.

Apparently, those settlement talks have broken down and a lawsuit against Goldman is imminent. Not surprisingly, the Aussies are pissed about losing about one-fifth of their fund on the Timberwolf deal and claim Goldman’s sales and trading desk misled them. Timberwolf was made up of about $1 billion of subprime mortgages originated by Washington Mutual and was described by at least one Goldman employee as “one shitty deal.”

"Naturally we are pretty passionate about the events of 2007," Peter Dobson, one of the Basis Fund’s directors, told Reuters.

If the Aussie’s file suit, it’ll be interesting to see if they use some of the emails the Crisis commission has obtained on the Timberwolf deal. Goldman will no doubt argue that these guys were sophisticated enough to do their own diligence on the deal, which they obviously failed to do.

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