The firm is seeking $90 million in punitive damages and a further $30 million in compensatory damages due to the bankâs alleged âfraudulent activitiesâ.
ACA accused the bank of âegregerious conductâ in its marketing and sale of the ABACUS collaterized debt obligation, which the bank undertook on behalf of hedge fund Paulson & Co.
The insurer claims it was duped into taking a long position against the product and providing insurance unaware that the hedge fund took a short position.
In the filing, the firm said: âHad Paulsonâs true role as a short investor selecting the portfolio been known, neither ACA nor anyone else would have taken a long position in it.
âBecause of Goldman Sachsâs deceit - which led ACA to reasonably believe that ABACUS was a valuable product selected by the equity investor with identical objectives - ACA invested in what was in fact a worthless product.â
Goldman Sachs was accused of fraud by the Securities and Exchange Commission in relation to ABACUS.
The investment bank agreed to pay $550 million in damages to settle the charges in July of last year.
By Jim Ottewill