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Fabrice Tourre testifies on Capitol Hill in Washington, DC, April 27, 2010/AFP


Ex-Goldman Sachs trader’s US fraud trial starts Monday

Fabrice Tourre testifies on Capitol Hill in Washington, DC, April 27, 2010/AFP

Fabrice Tourre testifies on Capitol Hill in Washington, DC, April 27, 2010/AFP

NEW YORK CITY, Jul 15 – The trial of former Goldman Sachs trader Fabrice Tourre, who is accused of misleading investors about risky assets linked to the US housing market meltdown, starts Monday in New York.

Tourre, a 34-year-old Frenchman also known by the nickname “Fabulous Fab,” has been charged with fraud by securities regulators, in connection with a fund which lost investors around $1 billion.

His trial, which is expected to last two to three weeks, will be heard in a Manhattan courtroom presided over by Judge Katherine Forrest.

After jury selection, lawyers for the Securities and Exchange Commission (SEC) and for the defense will begin their arguments.

Goldman Sachs, which was also named in the initial SEC complaint, is no longer sitting at the defense table, having agreed to pay a record $550 million to settle the government’s charges of fraud.

But Tourre has denied any liability.

In a document filed with the court in 2010, the Frenchman said he “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.”

Tourre is one of several traders who have become symbols of the excesses of the financial sector that contributed to the global economic crisis of 2007-2008 — whose repercussions are still being felt today.

At Goldman Sachs, in early 2007, Tourre designed the complex “Abacus” investment product, based on subprime, or higher-risk mortgage-backed, securities.

He was accused of failing to warn investors that a hedge fund headed by investor John Paulson was involved in the selection of the composition of Abacus. Paulson was betting on the fall of the US housing market.

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When the affair became public in April 2010, US media lambasted the apparent arrogance of Tourre, who refused to apologize during a hearing in Congress.

In private emails published after the scandal broke, Tourre, then a vice president at Goldman Sachs, called the financial products he was creating “monstrosities” and little “Frankenstein,” and made fun of the “poor, little subprime borrowers.”

“Fabrice Tourre has done nothing wrong. He is confident that when all the evidence is considered, the jury will soundly reject the SEC’s charges,” his lawyers said in an email sent to AFP.

The trial, however, could cost him dearly as the SEC is demanding reimbursement for losses, as well as a fine.

A conviction could also result in him being banned from the trading floor — but Tourre has already left Goldman Sachs.

The graduate of France’s Ecole Centrale and of America’s Stanford University has become a student again, at the University of Chicago, after some time working with humanitarian groups in Rwanda.

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