An investor's legal challenge to Goldman Sachs' infamous Timberwolf 2007-1 collateralized debt obligation (CDO) proved more bark than bite, as a U.S. District judge has thrown out the case.
Australian hedge fund Basis Yield Alpha, which is no longer in business, had sued the financial giant, claiming Goldman did not reveal to investors its short positions in the Timberwolf deal. The Wall Street Journal reported Friday Judge Barbara Jones of the U.S. District Court for the Southern District of New York dismissed the case, citing a Supreme Court decision that concluded that U.S. securities-fraud laws apply only to domestic transactions. Attorneys for Basis Yield Alpha were unable to prove the CDO investment warranted that status.
Attorneys for Basis Yield Alpha have 30 days to refile the lawsuit, the Wall Street Journal reports.