Hedge fund exec testifies in NYC case

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Associated Press

Posted on July 16, 2013 at 11:02 PM

Updated Tuesday, Jul 16 at 11:02 PM

NEW YORK (AP) — A former hedge fund executive has testified in a New York City case about how the fund made $1 billion off the housing market collapse.

Paolo Pellegrini took the witness stand Tuesday at the civil trial of Fabrice Tourre (fah-BREES' toor). The Securities and Exchange Commission has accused the former Goldman Sachs trader of scheming to give the hedge fund and Goldman client, Paulson & Co., an advantage over other investors.

Pellegrini testified that the hedge fund foresaw in 2006 that "there would be a lot of mortgage defaults" and decided to bet against mortgage-based investments.

In opening statements Monday, prosecutors accused Tourre of using "lies, trickery and deception" to help Paulson make a killing.

The SEC never charged anyone at Paulson.

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