Thursday, 31 July 2014
Last updated 3 hours ago
Apr 22 2010 | 11:12am ET
Fabrice Tourre, the Goldman Sachs executive charged with defrauding investors in the Paulson & Co. collateralized debt obligation case, has lost his license to work in London.
Goldman has applied to de-register its embattled vice president with the Financial Services Authority. Tourre, who was placed on paid leave after the U.S. Securities and Exchange Commission charged him and his employer with misleading investors, has been registered with the FSA since 2008.
Meanwhile, a former Goldman salesperson who spoke with the SEC has been identified as Gail Kreitman, Reuters reports. According to the SEC’s complaint, Kreitman, who left Goldman last year, failed to correct an executive at ACA Management, which selected the securities in the CDO in question and was a major investor in it, who suggested that Paulson was long the CDO.
The SEC contends that Goldman misled ACA and other investors about Paulson’s intention, which was to short the CDO, ABACUS-2007-AC1. The firm and Tourre are also accused of misleading investors about Paulson’s role in selecting the residential mortgage-backed securities that went into the CDO. But former Paulson & Co. portfolio manager Paolo Pellegrini testified that his old firm told ACA that it was bearish on the CDO, and that ACA rejected most of the securities Paulson suggested be included.
In Goldman’s bid last year to keep the SEC from filing charges, it claimed that Kreitman may not have “understood the significance of [ACA executive Laura] Schwartz’s statements suggesting she believed Paulson to be an equity investor."
“The fact that Ms. Kreitman did not correct Ms. Schwartz’s statements that Paulson was an equity investor does not indicate that she attempted to conceal the truth from ACA,” Goldman’s lawyers wrote to the regulator.
Kreitman has not been charged with any wrongdoing in the case.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…