No New Trial For Tourre

Jan 8 2014 | 10:46am ET

The federal judge who presided over Fabrice Tourre's civil fraud trial has endorsed the jury's verdict against the former Goldman Sachs executive, as the Securities and Exchange Commission moved to ensure he'll be able to pay whatever penalty comes from it.

U.S. District Judge Katherine Forrest yesterday rejected Tourre's bid to either have the charges against him dismissed or a new trial ordered. Tourre's lawyers argued that, as he received no compensation for allegedly misleading investors in a Paulson & Co.-linked collateralized debt obligation, and since the SEC had failed to show that the CDO was a "domestic offer," the case should not stand.

Forrest wrote that "none of these arguments has merit."

"The bottom line is that Tourre and Goldman Sachs designed a transaction with Paulson to enable Paulson to short a weak-quality portfolio of residential mortgage-backed securities," she explained. "A jury could reasonably infer that informing the long investors that ACA had selected the portfolio—while leaving out that Paulson was a short and had also selected the portfolio—was a necessary part of making the fraudulent scheme a success."

Forrest is still considering the SEC's request that she impose a $1.15 million penalty against Tourre. In case she does so, the SEC yesterday asked the judge to order Tourre to keep at least as much in a U.S. bank account.

The regulator made the request after it learned through "law enforcement channels" that Tourre planned to lend £300,000 from a U.K. bank account to a close relative who is buying an apartment. Tourre's lawyer has told the SEC he intends to keep enough money in his U.S. accounts to cover the maximum penalty.

Goldman paid $550 million to settle its role in the CDO three-and-a-half years ago.

Tourre, who is now a graduate student in Chicago, can still appeal the August verdict after Forrest imposes a penalty.


In Depth

Q&A: Filippo Pignatti Morano On The Ultimate Alternative Investment...Classic Cars

Jan 29 2015 | 12:37pm ET

In 2011, Filippo Pignatti Morano launched a fund to invest in classic cars. FINalternatives...

Lifestyle

Looking For A Hedge Fund Manager? Try Davos

Jan 28 2015 | 8:48am ET

Davos, Switzerland seems to have become the hedge fund capital of the world—at...

Guest Contributor

From Switzerland With Love: Some Hard Truths About Central Banks And Risk

Jan 23 2015 | 7:54am ET

In the wake of the Swiss National Bank uncoupling the country’s currency from...

 

Editor's Note