NEW YORK, July 15 (Reuters) - 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 financial crisis.
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,” Forrest said.
The case is SEC v. Tourre, U.S. District Court, Southern District of New York, No. 10-03229.