Ex-Goldman VP Tourre seeks to toss fraud verdict in SEC case

Tue Oct 1, 2013 6:27pm EDT
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By Jonathan Stempel

NEW YORK (Reuters) - A former Goldman Sachs Group Inc vice president who was found liable for securities fraud over a failed mortgage transaction asked a federal judge to dismiss the U.S. Securities and Exchange Commission case against him or set a new trial.

Fabrice Tourre said his jury erred in finding him liable on six of the seven civil charges he faced over the transaction, which the SEC said caused $1 billion of investor losses, because the evidence was inadequate or was never presented in court.

Letting the verdict stand "would work a manifest injustice to Mr. Tourre," his lawyers wrote in a Monday night filing in the U.S. District Court in Manhattan.

SEC spokesman John Nester said on Tuesday: "The motion has no merit and we look forward to filing our response."

The August 1 verdict was the SEC's first major courtroom victory in a case stemming from the recent financial crisis.

Jurors found Tourre, 34, liable for misleading investors in the 2007 synthetic collateralized debt obligation Abacus 2007-AC1, by concealing how hedge fund billionaire John Paulson helped construct the transaction and bet it would fail.

He was also held liable for misleading ACA Capital Holdings Inc, which like Paulson also chose assets for Abacus, into believing Paulson's firm would be an equity investor in the CDO.

Goldman agreed in a July 2010 settlement with the SEC to pay $550 million, without admitting wrongdoing.   Continued...

Former Goldman Sachs bond trader Fabrice Tourre leaves the Manhattan Federal Court in New York August 1, 2013. REUTERS/Keith Bedford