to Bear Stearns working in the mergers and acquisitions department, and then to Gruss Partners LP, where he was a general partner. In 1994, he founded his own hedge fund, Paulson & Co., with $2 million and one employee, located in office space rented from Bear Stearns on the 26th floor of 277 Park Avenue. The firm moved to 57th and Madison in 2001. By 2003, his fund had grown to $300 million in assets. Paulson and his company specialize in "event-driven" investments—i.e. in mergers, acquisitions, spin-offs, proxy contests, etc.—and he has made hundreds of such investments throughout his career. Many of the events involved merger arbitrage—which has been described as waiting "until one company announces that it's buying another, rushing to purchase the target company's shares, shorting the acquirer's stock (unless it's a cash deal), and then earn the differential between the two share prices when the merger closes." An example of a proxy event investment Paulson made was during Yahoo's proxy contest in May 2008, when Carl Icahn launched a proxy fight to try to replace Yahoo's board. In 2010, he set another hedge fund record by making nearly $5 billion in a single year, primarily investing in the gold sector. However, in 2011, he made losing investments in Bank of America, Citigroup and the fraud-suspected China-based Canadian-listed company, Sino-Forest Corporation. His flagship fund, Paulson Advantage Fund, fell sharply in 2011. Paulson has also become a major investor in gold. Subprime Mortgage Crisis Paulson became world-famous in 2007 by shorting the US housing market, as he foresaw the subprime mortgage crisis and bet against mortgage-backed securities by investing in credit default swaps. Sometimes referred to as the greatest trade in history, Paulson's firm made a fortune and he earned over $4 billion personally on this trade alone. Paulson convinced Goldman Sachs to market risky home loans in Arizona, California, Florida and Nevada as safe investments. Together, Paulson and Goldman created the Abacus 2007-AC1 investment vehicle and kept Paulson's bet against the underlying assets from people who purchased it. Paulson escaped indictment because his firm maintained that it was always transparent about its view of the mortgages that had been securitized. Goldman was sued by the Securities and Exchange Commission and had to reach a settlement for their lies about Abacus. On July 15, 2010, Goldman settled out of court, agreeing to pay the SEC and investors US$550 million,