Fabrice Tourre, Former GS Trader, Ordered To Pay Nearly $1 Million

Judge Forrest also barred Fabrice Tourre from seeking to have Goldman Sachs Group Inc (NYSE:GS) cover his civil fines but said he could seek reimbursement from others, but to say that the book was thrown at Fabrice Tourre  would risk overstatement. She denied the SEC’s request for an injunction barring the defendant from violating federal securities laws but said the regulatory agency could reapply if he re-enters the securities industry in the next three years.

Additionally, the SEC was looking for $910,000 in fines plus the repayment of ill-gotten gains and the interest that would have accrued since the event. The SEC said: “We’re pleased that the judge’s decision imposes the disgorgement amount we recommended as well as other significant penalties for providing false marketing materials to investors. The ruling reflects the SEC’s intent of pursuing meaningful sanctions to punish individuals responsible for misconduct and deter others from violating the federal securities laws.”Abacus 2007-AC1

The judgement follows a federal jury’s decision to find him libel on six charges that he lied, or at least mislead, investors in a synthetic collateralized debt obligation, or CDO, linked to mortgages called Abacus 2007-AC1. At the heart of the SEC’s claims against Fabrice Tourre was that he concealed from investors that Abacus was put together by Paulson & Co. though the hedge fund bet that the package would fail.

He was also accused of misleading ACA Capital Holdings, which chose a number of the packaged assets, under the belief that Paulson would be an equity investor in the CDO rather than a contrary investor.

“The fraud on ACA was critical to making the transaction work; without ACA as portfolio selection agent, Goldman would not have been able to convince others to invest in the equity of the transaction,” the judge wrote.