FGIC Claims Putnam Misrepresented Failed $900M CDO

Law360, New York (October 2, 2012, 10:06 PM EDT) -- Financial Guaranty Insurance Co. hit Putnam Advisory Co. with a complaint Monday alleging the Boston-based investment adviser fraudulently induced FGIC to insure $900 million of credit protection in a collateralized debt obligation whose assets had actually been selected for their weakness.

According to a suit filed in federal court in Manhattan, Putnam did not choose the assets for its Pyxis CDO independently and in good faith but instead allowed the selection process to be controlled by Magnetar Capital LLC, a hedge fund manager that had made...
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