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Goldman Sachs Trader Found Liable For Fraud That Contributed To Financial Crisis

Fabrice “Fabulous Fab” Tourre was convicted by a jury of six counts of civil securities fraud. Tourre was at the center of Goldman Sachs’ trading in the mortgage backed security market in which Goldman Sachs helped sell poorly constructed frankenbonds made up of various people’s mortgages known as Collateralized Debt Obligations or CDOs to clients while simultaneously betting on those CDOs to fail.

As Tourre wrote in numerous emails, Goldman Sachs knew the CDOs were going to blow up in their clients’ faces, but didn’t warn their clients they profited on their misfortune.

A former Goldman Sachs trader at the center of a toxic mortgage deal lost a closely watched legal battle on Thursday, giving Wall Street’s top regulator its first significant courtroom victory in a case stemming from the financial crisis. A federal jury found the trader, Fabrice Tourre, liable on six counts of civil securities fraud after a three-week trial in Lower Manhattan…

Five years after Wall Street risk-taking nearly toppled the economy, the S.E.C. has taken only a handful of employees to court in connection with the crisis; most cases have been settled. The agency has not leveled fraud charges against one top executive at a big bank.

Tourre was not a top executive at Goldman Sachs and was targeted mostly due to incriminating emails where he bragged about screwing his clients. The email evidence seems to have shamed the SEC into action as Goldman Sachs itself merely paid a fine for helping cause the financial crisis.

The S.E.C.’s case against Mr. Tourre hinged on the contention that he and Goldman sold investors a mortgage security in 2007 without disclosing a crucial conflict of interest: a hedge fund that helped construct the deal, Paulson & Company, also bet that it would fail. In his opening argument to the jury, Mr. Martens, the S.E.C.’s lead lawyer, depicted the commission’s case as an assault on “Wall Street greed,” arguing that Mr. Tourre created a deal “to maximize the potential it would fail.”

Mr. Tourre was living in a “Goldman Sachs land of make-believe” where deceiving investors is not fraudulent, Mr. Martens declared on Tuesday.

So case closed? Is this the end? One civil trial for one Goldman Sachs trader, one fine for the firm, and we are all done with the crimes that destroyed America’s middle class and brought the global economy to its knees? Apparently so.

Tourre noted in his defense that senior executives at Goldman Sachs approved the deals he performed that led to his fraud conviction. Some of whom still work at the firm, will they strike again? Is the economy safe from Goldman Sachs?

CommunityThe Bullpen

Goldman Sachs Trader Found Liable For Fraud That Contributed To Financial Crisis

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Fabrice “Fabulous Fab” Tourre was found liable by a jury of six counts of civil securities fraud. Tourre was at the center of Goldman Sachs’ trading in the mortgage backed security market in which Goldman Sachs helped sell poorly constructed frankenbonds made up of various people’s mortgages known as Collateralized Debt Obligations or CDOs to clients while simultaneously betting on those CDOs to fail.

As Tourre wrote in numerous emails, Goldman Sachs knew the CDOs were going to blow up in their clients’ faces, but didn’t warn their clients they profited on their misfortune.

A former Goldman Sachs trader at the center of a toxic mortgage deal lost a closely watched legal battle on Thursday, giving Wall Street’s top regulator its first significant courtroom victory in a case stemming from the financial crisis. A federal jury found the trader, Fabrice Tourre, liable on six counts of civil securities fraud after a three-week trial in Lower Manhattan…

Five years after Wall Street risk-taking nearly toppled the economy, the S.E.C. has taken only a handful of employees to court in connection with the crisis; most cases have been settled. The agency has not leveled fraud charges against one top executive at a big bank.

Tourre was not a top executive at Goldman Sachs and was targeted mostly due to incriminating emails where he bragged about screwing his clients. The email evidence seems to have shamed the SEC into action as Goldman Sachs itself merely paid a fine for helping cause the financial crisis.

The S.E.C.’s case against Mr. Tourre hinged on the contention that he and Goldman sold investors a mortgage security in 2007 without disclosing a crucial conflict of interest: a hedge fund that helped construct the deal, Paulson & Company, also bet that it would fail. In his opening argument to the jury, Mr. Martens, the S.E.C.’s lead lawyer, depicted the commission’s case as an assault on “Wall Street greed,” arguing that Mr. Tourre created a deal “to maximize the potential it would fail.”

Mr. Tourre was living in a “Goldman Sachs land of make-believe” where deceiving investors is not fraudulent, Mr. Martens declared on Tuesday.

So case closed? Is this the end? One civil trial for one Goldman Sachs trader, one fine for the firm, and we are all done with the crimes that destroyed America’s middle class and brought the global economy to its knees? Apparently so.

Tourre noted in his defense that senior executives at Goldman Sachs approved the deals he performed that led to his fraud conviction. Some of whom still work at the firm, will they strike again? Is the economy safe from Goldman Sachs?

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Jane Hamsher

Jane Hamsher

Jane is the founder of Firedoglake.com. Her work has also appeared on the Huffington Post, Alternet and The American Prospect. She’s the author of the best selling book Killer Instinct and has produced such films Natural Born Killers and Permanent Midnight. She lives in Washington DC.
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