NEW YORK (Reuters) - Testimony ended Monday in the civil fraud case of Fabrice Tourre, with lawyers for former Goldman Sachs trader not calling any witnesses before the U.S. Securities and Exchange Commission’s case goes to a Manhattan federal jury.
Tourre’s lawyers had been expected to call witnesses including hedge fund billionaire John Paulson to testify on his behalf.
Instead, his lawyers asked the presiding judge to take the case away from the jury and rule in Tourre’s favor, which, as expected, she rejected.
“There is a lot of evidence the jury is entitled to weigh,” U.S. District Judge Katherine Forrest said.
Closing arguments will begin on Tuesday morning, and Forrest said jury deliberations may begin on Wednesday.
The SEC accused Tourre of not disclosing to investors that Paulson’s hedge fund firm, Paulson & Co Inc, selected mortgage securities tied to a 2007 deal called Abacus 2007-AC1 and planned to bet against it.
The SEC also said Tourre misled ACA Capital Holdings Inc, the company brought in to select assets linked to Abacus, into believing Paulson would be an equity investor in the $2 billion synthetic collateralized debt obligation offering.
Investors in Abacus lost about $1 billion, while Paulson made about that same amount betting against it.
Tourre has denied wrongdoing. Goldman Sachs Group Inc, originally a co-defendant, agreed in 2010 to settle with the SEC for $550 million without admitting wrongdoing.
The SEC rested its case Monday after playing a video deposition of Michael Nartey, a former Goldman employee in London who marketed Abacus notes to IKB Deutsche Industriebank AG, one of the investors the SEC says was burned by the deal.
In total, the SEC introduced testimony from 11 witnesses who appeared live or gave depositions.
Tourre testified for three days. While his lawyers did not call any other witnesses, eight the SEC called were on Tourre’s witness list too.
Jurors may consider Tourre’s decision not to call other witnesses a plus for the defense, said Robert Mintz, a former federal prosecutor and now a partner at McCarter & English.
“It’s a sign that the defense believes that the SEC has not met its burden of proof,” he said.
Paulson at the time of the Abacus deal was engaged in a broader bet against the U.S. housing market in 2007. The bet earned him Wall Street fame and billions of dollars.
As recently as July 19, Tourre’s defense team had said it planned to call Paulson. Testimony had been expected to continue through at least much of this week.
The case is SEC v. Tourre, U.S. District Court, Southern District of New York, No. 10-03229.
Reporting By Katya Wachtel and Nate Raymond; Editing by Lisa Von Ahn and Steve Orlofsky