* Judge declines to block use of January 2007 call recording in lawsuit
* Case centers on CDO called Abacus 2007-AC1
* Trial set for July 15
By Nate Raymond
NEW YORK, April 26 (Reuters) - Three years after Fabrice Tourre became the face of a major U.S. regulatory action against Goldman Sachs Group Inc, a newly uncovered phone recording is giving the Securities and Exchange Commission ammunition in its fraud case against the former bond trader.
The January 2007 call was between a Goldman saleswoman and an executive at ACA Financial Guaranty Corp, which helped pick securities backing the collateralized debt obligation about which Goldman and Tourre allegedly misled investors.
As Tourre looked on, U.S. District Judge Katherine Forrest at a Friday hearing in Manhattan federal court denied his bid to keep the recording from being admitted at his upcoming trial, scheduled for July 15.
In a lawsuit filed in April 2010, the SEC accused Tourre and Goldman of defrauding investors in a CDO called Abacus 2007-AC1.
The agency said Tourre and the bank did not disclose that a hedge fund run by billionaire John Paulson helped pick and subsequently bet against the underlying securities.
Tourre gained particular notoriety for having referred to himself at one point in the process as "fabulous Fab," and has testified before Congress.
He has denied wrongdoing and is contesting the SEC's claims. Goldman, in contrast, settled for $550 million in July 2010, without admitting wrongdoing.
On the recording, Goldman saleswoman Gail Kreitman is heard telling ACA employee Lucas Westreich that Goldman was "placing a hundred percent of the equity" with Paulson & Co Inc. Kreitman has not been charged with wrongdoing.
The SEC wants to use the call to support its claims that Tourre tricked ACA into believing Paulson had a long investment in the CDO when the hedge fund instead planned to bet against it.
"This is clear evidence that ACA was told, 'They're taking equity,'" Christian Schultz, an SEC lawyer, said at the hearing.
The recording of the call emerged in December 2012 amid litigation between Goldman and ACA over the CDO.
Tourre's lawyers contend the audio file shouldn't be admitted, saying the SEC improperly failed to disclose telephone logs that would have revealed ACA had recordings like this and others that could be evidence.
"That's the penalty they should pay for conducting an improper investigation and not getting it," said Pamela Chepiga, a partner at Allen & Overy representing Tourre.
In allowing the SEC to seek to admit the recording at trial, Forrest on Friday expressed frustration with the agency, saying she thought this "could have been handled differently.
"This is a mistake," Forrest said. "But we're going to move beyond it."
She said Tourre's lawyers could conduct further discovery and depositions related to the recording. She also asked the SEC to report by Wednesday the scope of other tapes existing related to Tourre's case.
Neither Chepiga nor a spokesman for the SEC responded to requests for further comment after the hearing.
Goldman had no immediate comment, and representatives for ACA and Paulson did not immediately respond to requests for comment.
The case is SEC v Goldman Sachs & Co et al, U.S. District Court, Southern District of New York, No. 10-03229.