Good grief. So, to back up a little, the crux of the SEC’s case against Goldman Sachs is that it was never disclosed that, when Paulson & Co assembled a motley pile of CDOS for an outfit called ACA to sell to our German bank friends, Paulson actually intended to short against those CDOs. (In popular parlance, “to bet against” those CDOs. And when that package went south, Paulson cleaned up.) So! And now it turns out that a Paulson guy, Paolo Pellegrini, went to the assemblers at ACA and informed them of this! He had an entire meeting scheduled with ACA’s CDO person devoted to this topic. Based on what we know now, which of course is not everything, we’d say: Updated chance of Goldman conviction: 1%. Updated chance of Goldman paying out a settlement: SOME HUGE NEGATIVE NUMBER.