The New York Court of Appeals revived a bond insurer’s $120 million lawsuit claiming Goldman Sachs Group (GS) lied about a pool of securities backed by subprime mortgages during the period leading up to the financial crisis, according to an article in Reuters.

In a 5-2 decision, it was decided that the suit by ACA Financial Guaranty Corp should move forward because the insurer had raised issues about the role of billionaire John Paulson's hedge fund in a collateralized debt obligation called Abacus, the article said.

ACA Financial said Goldman had deceived it into believing hedge fund Paulson & Co was a long investor in Abacus when it knew Paulson was betting the underlying mortgages would fail.

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