Tuesday, 22 July 2014
Last updated 6 hours ago
Jan 23 2014 | 11:33am ET
Former Goldman Sachs executive Fabrice Tourre doesn't think he should have to pay $1.1 million for misleading investors in a hedge-fund-linked collateralized debt obligation. But if he should have to pay anything, he suggests a figure a couple of orders of magnitude lower.
Tourre's lawyers this week proposed that he be fined $65,000 or less, after their client was found liable last year for deliberately misleading investors and the insurer about Paulson & Co.'s role in selecting the securities that went into the controversial CDO.
The filing is blistering towards the Securities and Exchange Commission, which brought the lawsuit against Tourre. It accuses the agency of singling out a "28-year-old newly promoted vice president working in an essentially unregulated area of the financial sector," while failing "to take enforcement action against any of the other people whom the SEC has tactically labeled co-schemers." It said he has "every intention" of paying the fine levied, and took issue with the SEC's "cynical interpretation" of Tourre's loan of US$500,000 to a family member buying an apartment.
A $1.1 million bill would be "unreasonably severe" as well as "unwarranted and unjust," Tourre's lawyers wrote. What's more, it is lacking in "any legal or factual basis."
Tourre's conduct was not "recurrent," the filing notes, citing "his otherwise immaculate nine-year career at Goldman and his efforts to rebuild his life and to start a new career over the last four years."
"The publicity that has attended this case has, to a large extent, served as a self-executing punishment for Mr. Tourre already," his lawyers wrote, adding that the case also makes it unlikely that Tourre will ever earn "anything close to his prior compensation level." And they provided a declaration from Goldman's former mortgage head, in which he says he recalls no "specific mathematical relationship" between Tourre's pay and his desk's profits.
U.S. District Judge Katherine Forrest is expected to levy the penalty in the coming weeks.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…