Goldman Sachs Group is in talks over a possible settlement with an Australian fund that said it became defunct after it bought into a $1 billion subprime mortgaged-linked security, the FT reported on Thursday.

Citing several people familiar with the matter the FT said Basis Yield Alpha Fund was seeking compensation over its $100 million investment in Timberwolf, a so-called hybrid collateralized debt obligation that Goldman took to market in March 2007.

Goldman Sachs spokesman Michael DuVally declined to comment on the report.

U.S. lawmakers probing Goldman Sachs's role in the financial crisis have pointed to Timberwolf, as a prime example of how the bank profited at its customers' expense.

(Reporting by Caroline Copley; Editing by Bernard Orr)

Goldman sachs Settlement