12 Mar 2014 06:10pm

Goldman trader ordered to pay £825,000 over fraud

Former Goldman Sachs trader Fabrice Tourre has been ordered to pay more than $825,000 by a US judge after being found guilty of defrauding investors in complex investments linked to sub-prime mortgages

The French former banker was ordered to pay $650,000 (£391,000) in civil fines today, plus an additional $175,463 to represent the portion of his bonus attributable to the transaction at the heart of the case.

It represents one of the highest-profile cases brought by US regulator the Securities and Exchange Commission (SEC). Tourre, who was sued alongside Goldman Sachs, which agreed in 2010 to pay $550m to settle the SEC charges. Goldman did not admit or deny wrongdoing.

The case centred around SEC claims that Tourre misled investors in a synthetic collateralised debt obligation (CDO), linked to mortgages called Abacus 2007-AC1.

The SEC accused Tourre of concealing from investors that Paulson & Co, the hedge fund of billionaire John Paulson, helped to put the transaction together, while making a bet that it would fail.

Tourre was accused of misleading ACA Capital Holdings, which helped choose Abacus assets, into thinking Paulson would be an equity investor in the CDO, rather than bet as part of a massive wager against sub-prime mortgages.

"He has shown no remorse or contrition," said US district judge Katherine Forrest.

The judge also barred Tourre from seeking to have Goldman cover his civil fines.

Andrew Ceresney, director at the SEC Division of Enforcement, said, “We’re pleased that the judge’s decision imposes the disgorgement amount we recommended as well as other significant penalties for providing false marketing materials to investors.

“The ruling reflects the SEC’s intent of pursuing meaningful sanctions to punish individuals responsible for misconduct and deter others from violating the federal securities laws.”

Tourre, who denied wrongdoing, resigned from Goldman in December 2012

Helen Roxburgh


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