By Nate Raymond and Katya Wachtel
NEW YORK, July 29 Testimony ended Monday in the
civil fraud case of Fabrice Tourre, with lawyers for former
Goldman Sachs trader not calling any witnesses before the U.S.
Securities and Exchange Commission's case goes to a Manhattan
Tourre's lawyers had been expected to call witnesses
including hedge fund billionaire John Paulson to testify on his
Instead, his lawyers asked the presiding judge to take the
case away from the jury and rule in Tourre's favor, which, as
expected, she rejected.
"There is a lot of evidence the jury is entitled to weigh,"
U.S. District Judge Katherine Forrest said.
Closing arguments will begin on Tuesday morning, and Forrest
said jury deliberations may begin on Wednesday.
The SEC accused Tourre of not disclosing to investors that
Paulson's hedge fund firm, Paulson & Co Inc, selected mortgage
securities tied to a 2007 deal called Abacus 2007-AC1 and
planned to bet against it.
The SEC also said Tourre misled ACA Capital Holdings Inc,
the company brought in to select assets linked to Abacus, into
believing Paulson would be an equity investor in the $2 billion
synthetic collateralized debt obligation offering.
Investors in Abacus lost about $1 billion, while Paulson
made about that same amount betting against it.
Tourre has denied wrongdoing. Goldman Sachs Group Inc
, originally a co-defendant, agreed in 2010 to settle with
the SEC for $550 million without admitting wrongdoing.
The SEC rested its case Monday after playing a video
deposition of Michael Nartey, a former Goldman employee in
London who marketed Abacus notes to IKB Deutsche Industriebank
AG, one of the investors the SEC says was burned by the
In total, the SEC introduced testimony from 11 witnesses who
appeared live or gave depositions.
Tourre testified for three days. While his lawyers did not
call any other witnesses, eight the SEC called were on Tourre's
witness list too.
Jurors may consider Tourre's decision not to call other
witnesses a plus for the defense, said Robert Mintz, a former
federal prosecutor and now a partner at McCarter & English.
"It's a sign that the defense believes that the SEC has not
met its burden of proof," he said.
Paulson at the time of the Abacus deal was engaged in a
broader bet against the U.S. housing market in 2007. The bet
earned him Wall Street fame and billions of dollars.
As recently as July 19, Tourre's defense team had said it
planned to call Paulson. Testimony had been expected to continue
through at least much of this week.
The case is SEC v. Tourre, U.S. District Court, Southern
District of New York, No. 10-03229.