SEC Case Against Goldman's Tourre Can Proceed

Jun 13 2011 | 12:15pm ET

Goldman Sachs executive Fabrice Tourre, the only individual accused in the collateralized debt obligation case that cost Goldman a $550 million settlement last year, will have to defend himself against a slimmed-down Securities and Exchange Commission lawsuit, a judge has ruled.

U.S. District Judge Barbara Jones ruled that, "by virtue of alleging Tourre was principally responsible for" ABACUS-AC-1, the $1 billion CDO at the center of the lawsuit, "and its marketing materials, the SEC sufficiently alleges that Tourre" broke the law and "knowingly, recklessly or negligently" misrepresented the CDO to clients. But she threw out several claims in the wake of a U.S. Supreme Court ruling last year denying U.S. legal protection to foreign investors who buy securities abroad.

The SEC alleges that ABACUS was structured and marketed on behalf of hedge fund Paulson & Co., which has not been accused of any wrongdoing. Goldman and Tourre were accused of misleading investors about Paulson's role—the regulator claims that Paulson had a hand in selecting the securities that went into the CDO, which it would make a killing shorting.

The mixed ruling allowed both sides to claim victory, with both saying they were "pleased."


In Depth

Q&A: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.