Monday, 30 November 2015
Last updated 2 days ago
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.
Oct 21 2015 | 10:41am ET
One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…