The issue is not whether the long side knew the short side existed, the issue is did GS mislead/lie about the composition of what the security contained? Alter

The issue is not whether the long side knew the short side existed, the issue is did GS mislead/lie about the composition of what the security contained? Alternatively, did the people selling insurance know what kind of insurance they were selling? By saying that ACA was constructing the portfolio and omitting Paulson's role, GS implies some kind of standard for portfolio construction. Was that standard different than what Paulson helped construct? My assumption is absolutely. Paulson was not creating a diversified portfolio, Paulson was creating a concentrated portfolio. Does the average bank/institution ever want to have a concentrated portfolio? Probably not. There's always somebody on the other side of the trade. Is that person misrepresenting what the goods are is the question.