Few weeks ago, the financial titan, Goldman Sachs was charged with fraud by the US Securities and Exchange Commission (SEC) in the structuring and marketing of a debt product against the benefit of the investors. The SEC alleged that Goldman Sachs did not tell investors the vital information about the collateralised debt obligation (CDO) that they were marketing.
The vital information was about a major hedge fund, Paulson & Co have been involved in choosing the securities that would be part of the portfolio, and taking a short position against the CDO in a bet that its value would fall. Through these trades and betting against these subprime mortgages, Paulson & Co have enjoyed the profit of close to 40 billions.
The book, The Greatest Trade Ever came in just in time that provides the reader the detailed insight on how John Paulson, the founder of Paulson & Co transforms his fund, which initial specialize in mergers & acquisitions deals to one of the biggest hedge fund in the world. The book also mentioned briefly how this subprime crises brought down Bear Stearn and Lehman Brothers, which caused financial meltdown around the world. Not only on John Paulson, this book also described how other bearish investors made great earnings after realised early the collapse of the housing market.
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