A&O and Sullivan bag key roles in Goldman fraud case

Allen & Overy (A&O) and Sullivan & Cromwell will play key roles when Goldman Sachs defends fraud allegations brought by the Securities and Exchange Commission (SEC).

Pamela Chepiga
Pamela Chepiga

Sullivan & Cromwell is representing Goldman Sachs, while A&O New York partner Pamela Chepiga is representing Fabrice Tourre, the Goldman trader also named as a defendant in the civil suit.

Chepiga is a former chief of the securities and commodities frauds unit at the state attorney’s office in the Southern District of New York, where she coordinated criminal prosecutions with the SEC.

Sullivan & Cromwell partners Richard Klapper and Rodgin Cohen are expected to take lead roles in representing Goldman, with whom the firm has a long-term relationship. 

Goldman is accused of two counts of misleading investors over the level of risk involved in a synthetic collateralised debt obligation (CDO) transaction that took place before the collapse of the sub-prime mortgage market.

It is alleged that Goldman did not disclose that hedge fund Paulson & Co, which took a short position in the portfolio, played a major role in putting it together.

Goldman denies the allegations. In a statement released on Friday it said: “We’re 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 company said it lost more than $90m (£58.41m) in the transaction and argued that extensive disclosure was provided by German bank IKB.