Blame
In response to SEC settlement, Goldman Sachs trader blames in-house lawyers
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Fabrice Tourre, the Goldman Sachs & Co. trader, has chosen a novel defense against federal regulators accusing him of fraud. He's blaming the in-house lawyers.
In a filing Monday (read more) in federal court in Manhattan, the self-described "Fabulous Fab" denied allegations by the Securities and Exchange Commission that he made materially misleading statements or omissions in a 2007 deal involving subprime mortgages.
Tourre asked the court to dismiss the complaint. (read more)
The SEC said Tourre was the principal figure who "devised the transaction, prepared the marketing materials, and communicated directly with investors."
But among several defenses to the charge, the filing said the claims against him are based on information "known to many different Goldman Sachs employees," including in the legal and compliance departments.
"Tourre, a French citizen and engineer by training, reasonably relied on Goldman Sachs' institutional process to ensure adequate legal review and disclosure of material information, and cannot be held liable for any alleged failings of that process," the filing stated.
His response comes less than a week after the giant Wall Street investment bank agreed to settle its role in the case for $550 million, without admitting or denying guilt.
But in the settlement, signed by general counsel Gregory Palm, Goldman acknowledged making a "mistake" in the marketing materials, calling them "incomplete."
The company also is cooperating in the SEC's investigation of Tourre, who remains on leave. Goldman is paying his legal expenses. Tourre worked as a vice president on the trading desk at company headquarters in New York City during the relevant period. He currently works in London as an executive director of Goldman Sachs International.
Tourre is being represented by Pamela Rogers Chepiga, David Esseks and Brandon O'Neil of the New York law firm Allen & Overy, which didn't return phone calls seeking comment.
The SEC has said that Goldman and Tourre should have told other parties in the deal that one of the key investors was taking part in choosing the underlying securities and was betting against the vehicle.
"The purported claims against Mr. Tourre and the allegations upon which they are based are improperly vague, ambiguous, and confusing, and omit critical facts," Tourre's filing said. It added that the marketing materials contained all relevant information for investors.
(Published by Law.com – July 21, 2010)