SEC seeks $1.1 million-plus from ex-Goldman VP Tourre

NEW YORK Mon Dec 16, 2013 9:16pm EST

Former Goldman Sachs bond trader Fabrice Tourre leaves the Manhattan Federal Court in New York August 1, 2013. REUTERS/Keith Bedford

Former Goldman Sachs bond trader Fabrice Tourre leaves the Manhattan Federal Court in New York August 1, 2013.

Credit: Reuters/Keith Bedford

NEW YORK (Reuters) - The U.S. Securities and Exchange Commission asked a federal judge to order former Goldman Sachs Group Inc vice president Fabrice Tourre to pay more than $1.1 million for his role in a failed 2007 mortgage deal, according to a court document filed Monday in Manhattan federal court.

In the SEC's highest-profile trial stemming from its investigations into causes of the 2008 financial crisis, a federal jury found Tourre liable in August on six of seven civil charges he faced over the deal, which the SEC said cost investors $1 billion in losses.

In its lawsuit, the agency said Tourre - who referred to himself as "the fabulous Fab" in an email describing his activities - misled investors by failing to disclose that hedge fund billionaire John Paulson helped choose, and intended to bet against, mortgage securities underlying the deal.

"These lies mattered," lawyers for the agency told U.S. District Judge Katherine Forrest in the document.

Paulson & Co made about $1 billion from his short position on the deal, while investors including ACA Capital Holdings Inc and IKB Deutsche Industriebank AG lost about the same amount, the SEC said.

"It is critical that Tourre's conduct be addressed through significant disgorgement and penalties, to ensure that he is punished for his wrongdoing and that he and others are deterred from engaging in such conduct in the future," lawyers for the agency said in the document.

The agency asked that Tourre pay a civil monetary penalty of $910,000. It also asked that he pay $175,463 in ill-gotten gains, plus interest of $62,858.03, according to the document.

The SEC also said Tourre should be prohibited from accepting reimbursement for the penalty from Goldman.

A spokesman for Tourre declined to comment and a spokesman for Goldman Sachs did not immediately return a request for comment.

The case is SEC v. Tourre, U.S. District Court, Southern District of New York, No. 10-03229.

(Editing by Stephen Coates)

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Comments (1)
breezinthru wrote:
In 2007 alone, Tourre received more than 2 million USD in compensation. A one million USD fine in this instance is more a handshake for a well-executed scam than a slap on the wrist.

A RICO prosecution by the federal courts could claw back all of the ill-gotten gains gleaned by Tourre and his accomplices during the years they worked on projects like Abacus. He and his accomplices could also receive lengthy incarcerations. That might actually have a chilling effect on future bad behaviors.

Apparently, the SEC is no less corrupt than the white-collar criminals the SEC is supposedly regulating.

Dec 17, 2013 1:10am EST  --  Report as abuse
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