Update: Credit to The Daily Beast with updating Pitt’s post with a disclosure explaining his conneciton to Paulson.
Here’s what was published:
Editor’s Note: An earlier version of this article neglected to note that Harvey Pitt has done work for hedge fund manager John Paulson, who helped Goldman Sachs develop the product at the centre of the SEC’s case but has not been sued in the matter. We regret the error. Mr. Pitt noted: “I had no involvement in these transactions nor with the SEC’s decision whether, and whom, to sue. My article doesn’t mention Paulson or discuss its role, other than to paraphrase the SEC’s allegation.”
But we just thought you should know — Pitt is tied into this story personally, having worked on behalf of Paulson during the greatest trade ever.
Here’s how WSJ’s Greg Zuckerman reported it in January 2008, during the heat of the battle:
But as his gains piled up, Mr. Paulson fretted that his trades might yet go bad. Based on accounts of barroom talk and other chatter by a Bear Stearns trader, he became convinced that Bear Stearns and some other firms planned to try to prop the market for mortgage-backed securities by buying individual mortgages.
Adding to his suspicions, he heard that Bear Stearns had asked an industry group to codify the right of an underwriter to modify or buy out a faltering pool of loans on which a mortgage security was based. Mr. Paulson claimed this would “give cover to market manipulation.” He hired former Securities and Exchange Commission Chairman Harvey Pitt to spread the word about this alleged threat.
Just thought you should know.
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