The major players caught up in charges from the U.S. Securities and Exchange Commission against Wall Street giant Goldman Sachs — Goldman itself, and hedge fund firm, Paulson & Co. Inc. — both issued statements late on Friday concerning the case.

Paulson, which is not accused of any wrongdoing by the commission, issued a statement stressing that it “is not the subject of this complaint, made no misrepresentations and is not the subject of any charges.”

The SEC alleges that Paulson helped pick underlying securities for a CDO that was structured and sold by Goldman, and then bet against those securities with credit default swaps. The firm says that while it did purchase credit protection from Goldman on securities issued under the CDO program in question, “we were not involved in the marketing of any ABACUS products to any third parties”, and that the CDO’s collateral manager “had sole authority over the selection of all collateral in the CDO”.

Goldman, which issued a terse denial earlier in the day, issued a more expansive statement Friday afternoon, saying, “We are disappointed that the SEC would bring this action related to a single transaction in the face of an extensive record which establishes that the accusations are unfounded in law and fact.”

The firm also raised four points in its defence: that it lost money on the deal; that the largest investor in the CDO selected the underlying securities; that it never told that investor that the hedge fund was going to be a long investor; and that it did provide extensive disclosure about the underlying securities.

Goldman said that it lost more than $90 million on the deal. “We were subject to losses and we did not structure a portfolio that was designed to lose money,” it said.

The allegations have yet to be proven, and Goldman has said that it will vigorously defend itself against them.

IE