ERS yesterday warned that the Financial Services Authority’s decision to formally launch an investigation into Goldman Sachs would open the floodgates for a raft of investors here in the UK to launch lawsuits against major institutions.
The FSA said yesterday it will liaise closely with the Securities and Exchange Commission (SEC) on the investigation, which will be “in relation to” the US regulator’s allegations.
The probe is thought to centre around the role of Goldman’s UK operations in the marketing of the “Abacus” mortgage-backed synthetic collateralised debt obligation (CDO) which netted short investor John Paulson $1bn (£0.65bn) in profits.
The FSA is also likely to look into the relocation of Fabrice Tourre, the man at the centre of the allegations, from New York to London in 2008.
But legal experts said the FSA’s investigation could act as a signal to UK investors who lost vast amounts of money in similar deals as the mortgage market soured during the crisis.
“There’s no question that the move will encourage investors on this side of the pond to take a very close look at it and work out if they could have a claim,” said Clive Zietman, head of commercial litigation at Stewarts Law.