(Corrects date for email Fabrice Tourre sent to Jan. 23, 2007
in sixth paragraph)
By Nate Raymond
NEW YORK, July 9 An infamous email in which
former Goldman Sachs vice president Fabrice Tourre referred to
himself as "the fabulous Fab" should not be introduced at his
securities fraud trial, his lawyer said on Tuesday.
Lawyer Sean Coffey said the email was a personal
communication between Tourre and his girlfriend and was
irrelevant to the case.
"These are emails that should be closely scrutinized,"
Coffey told the judge who will oversee the trial.
The U.S. Securities and Exchange Commission has accused
Tourre of misleading investors in a mortgage securities
investment in 2007 called Abacus 2007-AC1 that it said was
designed to fail.
Goldman Sachs Group Inc paid $550 million to settle
the allegations, without admitting or denying wrongdoing. Tourre
denies any wrongdoing and his trial starts in federal court in
New York on Monday.
Tourre sent the email on Jan. 23, 2007, to his girlfriend,
Marine Serres, who worked at Goldman Sachs in London. In it, he
said the "whole building is about to collapse anytime now,"
referring to financial markets.
"Only potential survivor, the fabulous Fab ... standing in
the middle of all these complex, highly leveraged, exotic trades
he created without necessarily understanding all of the
implications of those monstruosities!!!"
The SEC referred to the email in its lawsuit in April 2010,
it was later released in full by the U.S. Senate and "fabulous
Fab" became the nickname by which Tourre was known in the media.
The SEC said Tourre misled investors by failing to disclose
that the hedge fund run by billionaire John Paulson helped pick
the mortgages underlying the Abacus investment and later bet
In court on Tuesday, Matthew Martens, a lawyer for the SEC,
said the email showed Tourre's state of mind as the investment
was put together. "That's a critical email to our case, and I
plan on opening on it," Martens said.
Coffey said Serres wasn't even involved in the creation of
the Abacus investment, making the email irrelevant.
U.S. District Judge Katherine Forrest said she will "look
closely" at the email and decide if the SEC can include it in
its opening arguments, expected for Monday.
DROPPED WITNESS PROBE
The arguments over the email followed a series of rulings by
Forrest on what exactly the parties could introduce as evidence
and discuss at the trial.
Among them, Forrest said the SEC must give Tourre's lawyers
more details of a separate investigation by the SEC into Laura
Schwartz, who is a witness in the case against Tourre.
The SEC has said Schwartz was Tourre's primary point of
contact at ACA Financial Guaranty Corp, which helped put the
Abacus investment together and then insured it.
Tourre's lawyers have sought to challenge Schwartz's
credibility because she herself was under investigation in
relation to a different investment in which ACA Financial was
Last week, Schwartz's lawyers said in court documents that
the SEC had dropped its investigation into Schwartz.
Forrest on Tuesday ordered the SEC to produce transcripts of
three days of depositions the SEC took from Schwartz during the
probe. She also ordered the SEC to reveal any agreements it had
reached with Schwartz before it decided to end the
"The timing is such that I believe there should be limited
inquiry into bias," Forrest said.
Robin Alperstein, a lawyer for Schwartz, denied that any
such agreements existed, saying, "there is no deal."
The case is SEC v. Tourre, U.S. District Court, Southern
District of New York, No. 10-03229.
(Reporting by Nate Raymond; Editing by Eddie Evans and Andrew