Dealbook reports that there was a time, not long ago, when the hedge fund manager John A. Paulson seemed to be practically untouchable. Shuttled from meeting to meeting in a caravan of black S.U.V.’s, Mr. Paulson was living the hedge fund dream — he had made billions with a prescient bet on the collapse of the housing market, and billions more in the following years betting on the increasing value of gold.
But one year has made all the difference for Mr. Paulson. After making an ill-timed bet on an economic recovery in the United States and sinking more than $800 million into a Chinese timber concern later accused of fraud, one of his largest funds lost nearly 50 percent in 2011. The scandal at the timber company, the Sino-Forest Corporation, appeared to be one of the first big gaffes in the worst year of Mr. Paulson’s investing career.
Now, an investor lawsuit stemming from that loss has surfaced as well. On Tuesday, a prominent Florida investor sued Paulson & Company, accusing the firm of not conducting the proper due diligence when evaluating the investment in Sino-Forest. The company lost billions in market value when a little-known investment firm published a report likening it to a “Ponzi scheme….”
Find out more at http://dealbook.nytimes.com/2012/02/21/florida-investor-sues-john-paulsons-hedge-fund/
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