On Wednesday, a day after Goldman Sachs stock took a dip as the SEC’s lawsuit against the financial giant loomed large, The Wall Street Journal suggested that Goldman could catch a break in the case with the help of a former key player from the hedge fund at the heart of the deal that set off the SEC’s alarms. –KA

The Wall Street Journal:

Testimony from Paolo Pellegrini, a former top executive at hedge-fund Paulson & Co., could weaken the government’s lawsuit against Goldman Sachs Group Inc.

Mr. Pellegrini told investigators from the Securities and Exchange Commission that he had informed ACA Management LLC that his firm was betting against a transaction that is now at the center of the lawsuit, according to a person familiar with the matter.

The testimony, in late 2008, could be harmful to the government’s case against Goldman, which is accused of misleading ACA, the deal manager, about Paulson’s bearish position on the deal.

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