The long-awaited report of the Financial Crisis Inquiry Commission (“FCIC”) has now been released. Ironically, earlier in January, Goldman Sachs released its Report of the Business Standards Committee which was created to conduct an extensive review of Goldman Sachs' business standards and practices. The Goldman Report states as its very first principle “Our clients’ interests come first” and CEO Lloyd Blankfein said that the resulting recommendations “represent a fundamental re-commitment by Goldman Sachs to our clients, and the primacy of their interests.” But as the FCIC Report documents, in late 2006 and into 2007 Goldman put its own interests far ahead of its clients’ interests; indeed, its entire strategy was premised on taking advantage of its clients’ trust in the word of Goldman Sachs. This was the experience of the Basis Yield Alpha Fund (Master) which in June 2007 invested approximately $80 million in highly-rated securities issued by the now infamous Timberwolf synthetic CDO created by Goldman Sachs in the first half of 2007. The Basis Fund is suing Goldman in the Federal Court in New York for losses incurred from the investment which turned sour in a matter of weeks. The Fund’s claim centers on Goldman’s fraudulent statements made as part of Goldman’s aggressive sale tactics surrounding the investment. In order to get the transaction ‘over the line’ Goldman Sachs’ senior CDO trading personnel assured the Fund that it was seeing stability in the secondary CDO market and that the proposed purchase of the Timberwolf securities was a good entry point into the highly-rated CDO securities market. However, as has been made clear by the US Senate’s Permanent Subcommittee on Investigations and now the FCIC, since at least late 2006, Goldman Sachs in fact had a highly negative view of the CDO market, and was desperately trying to reduce its

exposure to that market, by creating “destined to fail” securities, selling them to its clients, and then secretly betting against them. From the very top, starting with Goldman CEO Lloyd Blankfein, the message went out for Goldman “to sell off cats and dogs” to the clients Goldman now claims to put first. As the FCIC reports, during this crisis, Goldman “cleaned up pretty well.” Goldman created and sold $25.4 billion of CDO securities from December 2006 to August 2007, including 17.6 billion of synthetic CDOs, including the $1 billion Timberwolf CDO. By doing so, Goldman unloaded much of its inventory of toxic assets, selling what appeared to be highly-rated bonds to its clients all the time expecting the bonds to default, and all the while shorting the very securities it was selling. The FCIC report also shows how before the sale of the Timberwolf securities to the Basis Fund, Goldman Sachs knew, as a repo lender to the Bear Stearns funds, that those funds had defaulted on their margin calls and that a flood of highly-rated CDO paper (including hundreds of millions of dollars worth of Timberwolf securities) was about to hit the secondary market, depressing prices and making the Timberwolf security essentially unsellable. The Fund is not surprised that the neutral and independent FCIC, after hearing testimony from Goldman Sachs and reviewing internal Goldman Sachs documents, found grave cause for concern over Goldman’s actions during this crucial period. The Fund continues aggressively to pursue its claim against Goldman Sachs. For further information:
CONTACT: In the United States: Eric Lewis – 202 833 8900; m 202 352 8900. In Australia: Michael Mullane d: +61 2 8284 9993;m: +61 414 590 296.

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