In a sign of their confidence that the Securities and Exchange Commission had failed to prove its case against their client, Fabrice Tourre's lawyers will mount no formal defense at his trial for allegedly misleading investors in a controversial collateralized debt obligation.
Tourre's defense team rested yesterday without calling a single witness. Instead, they'll hope that Tourre's own words—the former Goldman Sachs executive testified for three days after being called as a witness by the SEC—will be enough to convince a jury to reject the civil allegations against him.
The decision not to mount a defense means that Paulson & Co. founder John Paulson will not testify in the trial. Tourre's lawyers had planned to call Paulson to testify about the CDO, ABACUS-2007-AC1, which the SEC alleges was structured and marketed on Paulson's behalf. Tourre is accused of misleading investors about Paulson's role in selecting the securities that went in to the CDO and about the hedge fund's plans to short the vehicle, which it did, turning a huge profit.
The case will go to the jury tomorrow, after closing statements today.