FABRICE Tourre, a former designer of derivatives for Goldman Sachs, was last night found liable for defrauding investors by a New York jury after a toxic sub-prime deal turned sour.
The US Securities and Exchange Commission (SEC) alleged that Tourre told investors that a hedge fund had invested in a portfolio of mortgage assets he was responsible for. In fact, the fund had taken a short position, betting that the value of the assets would fall.
The scheme made around $1bn (£660m) for Paulson & Co, the hedge fund and Goldman Sachs client. Tourre was found liable on six of the seven counts brought by the SEC.
The SEC brought a civil rather than criminal case against Tourre, meaning he may face fines or be prohibited from working in US financial services again.
Tourre’s popular nickname is based on a series of emails obtained by the SEC, in which he referred to himself as the “Fabulous Fab”, and described the trades created before the financial crisis as “monstrosities”.
Goldman Sachs already settled with the SEC over the incident, paying out a $550m fine, the largest penalty ever paid by a Wall Street bank. However, the settlement did not include any admission of wrongdoing.
Andrew Ceresney, co-director of enforcement for the SEC, commented after the trial: “We will continue to vigorously seek to hold accountable, and bring to trial when necessary, those who commit fraud on Wall Street.”
Tourre is the only individual who was trialled for the deal, and the sole employee from Goldman Sachs to face a court case against the SEC since the financial crisis.