by a respected, putatively independent firm, Putnam, acting diligently and in good faith in theinterests of long investors, and using a rigorous selection process that was consistent with thehighest industry standards. Based on these representations, Intesa agreed to enter into a credit
default swap ("CDS") with Calyon in which Intesa provided protection on the $180 million ofputatively super senior, AAA-rated Class A-i notes issued by Pyxis (the "Pyxis Swap").
However, unbeknownst to long investors like Intesa, Putnam did not select the securities for
Pyxis; Magnetar did. In fact, Calyon and Magnetar deliberately structured the Pyxis CDO to
funds invested by those taking a long position. And lose money it did: Less than two yearslater, Intesa lost $180 million, the full amount of the Pyxis Swap. Unbeknownst to Intesa at the
time, its embedded losses on the Pyxis Swap were over
on the date the transaction
Calyon itself would have borne that loss had it not fraudulently transferred the risk toIntesa through the Pyxis Swap.
ntesa's loss was not the result of impersonal market forces. It was instead the
direct and intended result of the Defendants' actions—actions which were materially identical tothose for which Goldman, Sachs & Co. recently agreed to pay
million to settle claims
brought by the Securities and Exchange Commission ("SEC").
See Securities and ExchangeCommission v. Goldman, Sachs &
(S.D.N.Y. 2011). The
scheme was designed by Magnetar, which enlisted Calyon and Putnam to construct Pyxis
secretly from toxic assets. Magnetar then reaped hundreds of millions of dollars by bettingagainst the credit quality of the Pyxis assets it had surreptitiously selected. Meanwhile, Calyon
collected fees on the deal and, through the Pyxis Swap, shifted losses on the CDO which itwould have otherwise borne itself to Intesa, and Putnam collected fees for its purportedindependent management of Pyxis.
Case 1:12-cv-02683-RWS Document 1 Filed 04/06/12 Page 2 of 44