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NEW YORK — ACA Financial Guaranty Corporation, an insurer, sued Goldman Sachs Thursday over an investment that later went bad.
ACA is seeking $30 million in compensatory and $90 million in punitive damages. The lawsuit was filed in New York.
ACA's complaint is similar to a lawsuit filed by the Securities and Exchange Commission last April in connection with the same investment, called Abacus. The SEC accused Goldman of selling an investment created by hedge fund manager John Paulson which was designed to fail. Goldman and Paulson made money from the investment, while investors lost more than $1 billion.
Goldman paid the SEC $550 million to settle the charges.
ACA says it lost $30 million on the investment, and another $15 million from insuring it. The ACA complaint says Goldman deceived the insurer into believing that Paulson was also investing in Abacus. The complaint says: "Because of Goldman Sachs's deceit . ACA invested in what was in fact a worthless product."
A Goldman spokesman wasn't immediately available for comment.
