Thu August 1, 2013
Former Goldman Trader Found Liable For Billion-Dollar Fraud
Originally published on Thu August 1, 2013 1:59 pm
A federal jury in New York City has found that Fabrice Tourre, the former Goldman Sachs trader who regulators say caused investors to lose $1 billion, is liable in the mortgage securities fraud case filed against him by the Securities and Exchange Commission.
Regulators say Tourre, 34, a native of France who was nicknamed "Fab" in his office, packaged toxic subprime mortgages into a collateralized debt obligation that was sold to investors under the name Abacus in 2007.
"The U.S. Securities and Exchange claims Tourre hid the role of hedge fund Paulson & Co. in selecting the subprime mortgage bonds behind the investment, then made a $1 billion bet they'd fail," Bloomberg News reported earlier this week.
Tourre was found liable on six of the seven charges he faced. In 2010, Goldman Sachs agreed to pay $550 million to settle SEC charges against it in the case. Tourre left the company last year.
The SEC pursued civil charges against Tourre, meaning that his punishment could now range from a fine to a lifetime ban from trading in securities.
Tourre, who had risen to the rank of vice president at Goldman Sachs, "is the only employee of a big American bank to lose a courtroom battle to Wall Street's top regulator," The New York Times reports. Most other cases were settled before coming to a court judgment.
During the trial that lasted more than two weeks, Tourre's defense team did not call any witnesses to testify, a move that had been interpreted as a message to the jury that the regulators had failed to prove their case.
"We're obviously gratified with the jury's verdict and we appreciate their hard work," SEC lead prosecutor Matthew Martens said, according to The Wall Street Journal.