Ex-Goldman Trader Found Liable For Fraud
DAVID GREENE, HOST:
In New York, a jury has found a former Goldman Sachs securities trader liable on six of seven fraud charges. This is being seen as a big win for the Securities and Exchange Commission, as NPR's Dan Bobkoff reports.
DAN BOBKOFF, BYLINE: Before the financial crisis, Fabrice Tourre was a mid-level vice president at Goldman Sachs, and he was putting together a complex investment marketed under the name Abacus. Abacus was something called a synthetic collateralized debt obligation - one of those arcane, confusing investments based on subprime mortgages.
Now as Tourre was putting this investment together, he enlisted the help of a big-league hedge fund manager by the name of John Paulson. Paulson had a hunch that housing was about to collapse. Tourre allowed Paulson to pick some of the elements of the Abacus portfolio. But Tourre and Goldman Sachs never told potential investors that Paulson was involved in putting it together. And Tourre made it seem like Paulson thought this was a good investment - not something he was about to bet against.
Making false, misleading or incomplete statements to investors is enough for a fraud conviction. And the nine jurors agreed. Former federal prosecutor Robert Mintz says it's a long-awaited victory for the SEC.
ROBERT MINTZ: ...which as an agency, has shied away from pursuing individuals, and in the eyes of many, has really gone after entities with only slaps on the wrist, rather than try to hold individuals accountable for the financial meltdown.
BOBKOFF: As for Tourre, he faces potentially thousands of dollars in fines and could be banned from the industry.
Dan Bobkoff, NPR News, New York.
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