| NEW YORK, July 15
NEW YORK, July 15 The trial of former Goldman
Sachs Group Inc bond trader Fabrice Tourre began with the
selection of five women and four men as jurors on Monday, in a
case centering on alleged Wall Street wrongdoing during the
The U.S. Securities and Exchange Commission accuses Tourre,
34, of civil fraud, saying he misled investors in a mortgage
investment called Abacus 2007-AC1. The case is the
highest-profile to date stemming from the SEC's probe into the
causes of the 2008 financial crisis.
The three-week trial stems from a lawsuit the SEC filed
against Goldman Sachs and Tourre in 2010.
Tourre, who is no longer with Goldman and is earning a
doctorate in economics at the University of Chicago, is
proceeding to trial alone after Goldman agreed to pay a $550
million settlement in July 2010.
Tourre, wearing a black suit and orange tie, sat with his
counsel as the jury was selected on Monday.
The SEC contends Tourre misled investors in the Abacus
investment vehicle, called a synthetic collateralized debt
obligation, in 2007.
It says Tourre failed to disclose that Paulson & Co Inc, the
hedge fund run by billionaire John Paulson, was involved in
picking mortgage securities tied to the CDO and was also
shorting, or betting against, it.
Investors lost more than $1 billion after almost all the
securities tied to the transaction were downgraded, the SEC
says. Paulson earned about the same amount thanks to his bet
against it, the SEC says.
Tourre denies the allegation and is "confident that when all
the evidence is considered, the jury will soundly reject the
SEC's charges," his lawyers, Pamela Chepiga and Sean Coffey,
said in a statement.
Jurors for the trial were picked out of a pool of 48 people
brought into the courtroom. They include a retired special
education teacher; a former retail broker now teaching art
history; a recent medical school graduate; and a priest.
U.S. District Judge Katherine Forrest excused some potential
jurors after they said they had views about Wall Street or the
role of banks in the financial crisis. The first juror to be
excused said he had "a fairly jaundiced view of Wall Street."
Forrest also quizzed jurors on whether they had ever heard
of Abacus, Tourre or his nickname, "Fabulous Fab."
Earlier Monday, Forrest warned the lawyers on both sides to
"have a heart" and be mindful many jurors would not know
financial jargon expected to be used at trial.
Among the words or phrases she singled out were
"asset-backed," "short," "security," "flip book" and "swap." She
also cited the term "trading desk," saying "mere mortals don't
know what a trading desk is."
"Do not assume people know what investment bankers do,"
The case is SEC v. Tourre, U.S. District Court, Southern
District of New York, No. 10-03229.