| USWorld

Larger text Larger text Smaller text Smaller text | Order Photo Reprints

Trial to begin for ex-Wall Street trader likened to Big Bad Wolf

Email Newsletters

Sign up for one of our email newsletters.

Daily Photo Galleries

By The Associated Press
Sunday, July 14, 2013, 6:15 p.m.

NEW YORK — A judge presiding over the civil trial of a former Goldman Sachs trader accused of misleading investors about the true prospects of their bet on a package of mortgage-based securities has summed up the charges against him with a fairy tale, saying it's as if he's accused of handing Little Red Riding Hood an invitation to grandmother's house while concealing the fact the invitation was written by the Big Bad Wolf.

In the case against Fabrice Tourre, U.S. District Judge Katherine B. Forrest says the victims weren't to be “hooded children but rather large financial institutions, operating in a dog-eat-dog world.”

His trial will open on Monday.

The charges stem from a group of mortgage-based securities that were marketed in early 2007 when Tourre worked for Goldman Sachs as a vice president. Tourre was born in France and moved to the United States in 2000 to study at Stanford University.

The Securities and Exchange Commission accused Tourre in an April 2010 lawsuit of making misstatements and omissions to investors in a portfolio of 90 subprime and midprime residential mortgage-backed securities.

In an effort to clear its name, Goldman Sachs released private emails that Tourre had sent to his girlfriend in 2007 using his office account. Amid the sweet talk were frank assessments of an industry that was about to collapse.

The mortgage “business is totally dead, and the poor little subprime borrowers will not last so long!!!,” Tourre wrote in March 2007.

“Managed to sell a few abacus bonds to widows and orphans that I ran into at the airport,” he said in June, describing one of Goldman Sachs's Collateralised Debt Obligations, tied to the performance of subprime mortgage-backed securities.

The charges accuse Tourre of making false and misleading statements and aiding false statements and material omissions by his employer. The SEC sought a declaration that Tourre had violated securities laws, along with a disgorgement of profits and unspecified penalties and damages.

In July 2010, Goldman Sachs settled charges brought against it, agreeing to pay $550 million. It still faces private litigation in the matter, including a federal securities class-action lawsuit.

Subscribe today! Click here for our subscription offers.



Show commenting policy

Most-Read Nation

  1. VA Phoenix social worker on leave for Halloween costume
  2. U.S. has urged legal reforms abroad to block Islamic State recruits
  3. Foreign policy expert: Obama administration should create Syria safe areas
  4. Student dies in traditional Ohio State University lake jump
  5. Company backs away from pledge to cut drug’s $750-per-pill price
  6. N.H. prep grad to appeal sex assault verdict
  7. Ads for Nazi-themed show pulled from NYC subways
  8. Police investigate flights diverted for suspicious passengers, bomb threats
  9. Chicago cop charged with murder in killing of black teen
  10. Obama: No credible intelligence about terror plot against US
  11. U.S. troops suspended in airstrike on Afghan hospital