Typically, a transaction such as the Abacus deal would also be described in detail in a prospectus. The prospectus is a legal disclosure document that is prepared by underwriter's counsel and subject to review by several key players in the transaction.
However, a sales "pitchbook" is not subject to the same level of legal scrutiny although the firm's compliance officers often review and approve any non-standard material that is used to "pitch' a sale to clients.
If you flip through the document to the last few pages you will see a list of all the people that participated in the transaction. There is also a chart and detailed listing of the underlying mortgage securities that comprised the Abacus deal.
The issue in this case is that the Goldman Sachs trader, Fabrice Tourre, who pitched the sale of the Abacus deal to clients is alleged to have omitted critical disclosure that a hedge fund, Paulson & Co., that helped to select the undelying securities in the transaction was also short (taken a bet through a short trade position that the value of the underlying securities will decline).
The SEC believes that this is material information that should have been disclosed to the parties to the transaction, including ACA Capital and clients who subsequently lost significant money while the hedge fund, Paulson & Co., made a significant gain. All the clients are institutional clients -- so called "big boys".
Paulson & Co. has not been charged by the SEC because it is not their responsibility to provide full disclosure to Goldman Sachs' clients.
The Pitchbook For Goldman's Abacus Deal
Goldman Sachs prepared a 66-page presentation on the deal back on February 26th of 2007 to show to parties involved in the deal, such as Paulson & Co., ACA Capital, and RBS.
Check out the presentation
Image: Goldman Sachs
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