The Paolo Pellegrini Testimony Is Devastating To The SEC

Building Collapse

Looking at the exact language Paolo Pellegrini used when talking to the SEC, we have to conclude that if he was telling the truth, then this is incredibly devastating to the prosecution.

In other words, the central claim the ACA had no idea was short seems directly refuted.

From CNBC:

CNBC has examined documents in which a government official asked Pellegrini whether he informed ACA CDO manager Laura Schwartz about Paulson’s position in the portfolio, named Abacus 2007-AC1.

Did you tell her that you were interested in taking a short position in Abacus?” a government official asked Pellegrini, referring to the name of the CDO portfolio.

“Yes, that was the purpose of the meeting,” Pellegrini responded.

Later, when asked how this was conveyed, Pellegrini said that Paulson intended to “buy protection.”

He also apparently was very clear with Schwartz that Paulson was eager to fill the CDOs with mortgages related to low FICO scores in shaky regions.

Again, this is just one person saying this, but it’s hard not to see how this is massively exculpatory.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.