MELBOURNE (Reuters) - An informant for U.S. regulators probing fraud claims against Goldman Sachs has urged Australia’s markets watchdog to also investigate the U.S. bank, a newspaper said on Tuesday.
David Mapley, who was an outside director of Australian hedge fund Basis Yield Alpha Fund, saw the fund collapse in 2007 after it had invested in a subprime mortgage-related product marketed by Goldman’s local joint venture, Goldman Sachs JBWere.
Since then, he has helped the U.S. Securities and Exchange Commission (SEC) with inquiries into similar products, which led to civil fraud charges being filed against Goldman last month.
“I don’t know if the regulator in Australia is looking at this trade but they certainly should,” Mapley was quoted as telling The Australian, referring to the investment that sank his fund, a collateralized debt obligation known as Timberwolf.
A U.S. Senate panel investigating Goldman’s role in the subprime mess has released an email in which a former Goldman executive described one Timberwolf product as a “shitty deal.”
Goldman Sachs JBWere declined on Tuesday to comment on Mapley’s remarks in The Australian, which did not specify which of the various Timberwolf products his fund had invested in.
Mapley, speaking to the daily from his base in Switzerland, said the Timberwolf investment had been misrepresented to the Basis Yield Alpha Fund and that he had approached the U.S. SEC with his concerns soon after the fund’s collapse.
He was quoted as saying that the Australian Securities and Investments Commission (ASIC) should also look into the matter.
“Goldman Sachs JBWere was a part of the selling process and there were a lot of Australian investors who were caught,” he said. “ASIC should be encouraged to look into this trade.”
ASIC has also declined to comment on the matter.
The Wall Street Journal has reported that Mapley was an informant to the U.S. SEC, which accused Goldman on April 16 of civil fraud in connection with its marketing of another subprime mortgage-related product called ABACUS.
Timberwolf is a $1 billion hybrid collateralized debt obligation that Goldman brought to market in March 2007 and which quickly lost all of its value with the U.S. housing slump.
Basis Capital’s Basis Yield Alpha Fund went into liquidation after its Timberwolf investment collapsed in value, The Australian said, quoting Mapley as saying that he would be happy to assist the SEC further with its investigations into Goldman.
“The SEC was very much interested. I’d be very happy to assist them further if requested,” he was quoted as saying.
“They did request further assistance and information from the liquidator. I don’t know what has happened since,” he added.
Reporting by Sonali Paul; Editing by Mark Bendeich