An appeals court has allowed a defunct Australian hedge fund, Basis Yield Alpha Fund, to proceed with a $1 billion fraud case against Goldman Sachs & Co. The ruling is a win for the small litigation boutique Lewis Baach, whose founder told us he wants to hold Goldman accountable for pushing toxic collateralized debt obligations on investors.

Affirming a trial judge, the New York Supreme Court Appellate Division, First Department, refused on Thursday to dismiss BYAF’s claims that it was duped into investing in two now-notorious Goldman CDOs, known as Point Pleasant and Timberwolf. Goldman’s lawyers at Boies Schiller & Flexner argued that the hedge fund failed to present evidence of fraud. But the court disagreed, writing that “if plaintiff’s allegations are accepted as true, there is a ‘vast gap’ between the speculative picture Goldman presented to investors and the events Goldman knew had already occurred.”

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