Fabrice Tourre has been de-registered with the Financial Services Authority, meaning he will not be able to carry out any regulated work.
The move comes just days after Goldman insisted it would stand by the troubled executive, although a spokesperson said he had not been suspended by the bank and would stay on full pay for as long as he remains on leave. It could take up to a year for his case to reach trial.
Goldman and the 31-year-old, who dubbed himself “Fabulous Fab” in emails, are accused by the US Securities and Exchange Commission of misleading investors into buying a sub-prime mortgage-backed derivative that was destined to turn toxic. It is claimed that hedge fund client Paulson & Co influenced the portfolio’s construction in 2007 while planning to sell the instrument short.
As the FSA launched a formal investigation into the Wall Street titan in London yesterday, a political row broke out over the SEC’s lawsuit on both sides of the Atlantic.
Republicans in the US were furious at the timing of the watchdog’s charge, which comes before the Senate debates tough legal crackdowns on the banks tomorrow.
Representative Darrell Issa said: “It must be nice for Democrats that the SEC’s filing against Goldman Sachs so conveniently fits into their political agenda.” In a move that further inflamed tempers, the White House’s political arm sold Google adverts against search strings such as “Goldman Sachs SEC” urging the public to back the finance reforms.
Democratic former governor Eliot Spitzer piled in to suggest there was “no coincidence” to the timing of the SEC’s pursuit, while one prominent lawyer told City A.M.: “It’s intended to give a lot of PR for the Democrats and the SEC.”
Meanwhile, in the UK, chancellor Alistair Darling resisted calls for the government to cancel Goldman’s lucrative contracts advising on privatisation work. Liberal Democrat Treasury spokesman Vince Cable said “not a penny of taxpayers’ money should be paid” while the allegations hung over Goldman. The Tories said Prime Minister Gordon Brown should act on his accusation that the bank was “morally bankrupt”. But Darling said the government would continue to use the firm.