Paulson Shelves Canadian Retail Hedge Fund

Date: Wednesday, April 21, 2010
Author: FINAlternatives

Paulson & Co. has delayed the launch of a Canadian retail hedge fund following charges that Goldman Sachs defrauded investors in a collateralized debt obligation it set up for the $32 billion hedge fund.

Paulson announced plans for the new closed-end fund to be listed on the Toronto Stock Exchange in February. But the initial public offering has been delayed, despite having collected some C$20 million from investors since its preliminary prospectus was filed last month.

According to Dow Jones Newswires, it is unclear when or if the Propel Multi-Strategy Fund will be revived.

The fund was designed to give investors access to Paulson’s Lyxor/Paulson Advantage Fund and Lyxor/Paulson International Fund. It would also have bought shares of a gold exchange-traded fund to reflect John Paulson’s bullishness on the precious metal.

Paulson has not been charged with any wrongdoing in the Goldman case. But the Securities and Exchange Commission alleges that the hedge fund played an integral role in picking the residential mortgage-backed securities in the CDO in question, paying Goldman US$15 million to structure to vehicle, which it then shorted. Goldman is accused of misleading investors about Paulson’s role.