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

GSAM's Papagiannis: Liquid Alternatives For The Long Run

Apr 21 2017 | 8:44pm ET

Interest in liquid alternatives cooled a bit last year amid a broad shift in investor...

Lifestyle

Aston Martin Returns To Debt Market As DB11 Drives Turnaround

Mar 31 2017 | 5:21pm ET

James Bond’s preferred carmaker is returning to the public debt markets for the...

Guest Contributor

Debunking Conventional Investment Wisdom (Part II)

Apr 17 2017 | 5:56pm ET

The alternative investment industry is currently replete with buzzwords around data...

 

From the current issue of