An Australian hedge fund manager said it has filed a lawsuit against Goldman Sachs Group seeking more than $1bn (€830m) in damages after losing money in troubled mortgage-linked securities.

Basis Capital's Basis Yield Alpha Fund alleges it was defrauded when it purchased $78m of the Timberwolf synthetic collateralised debt obligations being sold by Goldman in June 2007. The Sydney-based hedge fund manager said in the suit that Goldman knew at the time that the securities were doomed as the mortgage market began to show cracks.