WSJ: Not Clear ACA Understood Paulson Role After All

As Bloomberg’s Lorraine Woellert was this afternoon reporting Goldman Sachs (GS) veep Fabrice “Fab-o” Tourre had agreed to testify before the Senate Permanent Subcommittee on Investigations next Tuesday, April 27 — sharing the chamber with Goldman CEO Lloyd Blankfein! — Dow Jones Newswires’s Greg Zuckerman and Serena Ng were refining this morning’s story, originally reported by CNBC, that hedge fund Paulson & Co. explicitly told ACA Capital it was shorting Goldman’s infamous Abacus trade.

An anonymous person “familiar with the matter” corroborates the rumor that Paulson & Co. executive Paolo Pellegrini informed ACA back in late 2008 that the fund was short the trade.

But Zuckerman and Ng followed up with Laura Schwartz, the ACA manager of CDO investments, the individual to whom Pellegrini supposed disclosed Paulson’s position. Schwartz is no longer with ACA, and hung up on the reporters, and it sounds like Schwartz, and ACA, may have not been entirely clear on what Paulson was doing after all:

Ms. Schwartz was a main point person in the discussions between ACA and Goldman and was at an early 2007 meeting with representatives of Paulson and Goldman, according to Goldman’s responses to the SEC’s “Wells” notice of possible civil charges, regarding the issue. After that meeting, Ms. Schwartz emailed a Goldman employee to ask for feedback on the meeting and said she wasn’t clear about how Paulson wanted “to participate in the space,” the Goldman papers said. Goldman argued in documents it submitted to the SEC that Ms. Schwartz, who was deeply involved in selecting the assets for the Abacus deal, should have known from previous ACA-managed deals that hedge funds could have both long and short positions in a CDO.