Former vampire squid ‘Fabulous’ Fabrice Tourre is on trial in New York, accused of ‘tricking’ investors to the tune of $1bn into backing a sub-prime mortgage called Abacus. On the first day of the hearing, the court was read an email from Tourre to his girlfriend – also a Goldman Sachs banker – in which he sought to justify his actions.
The defence calls it a ‘love letter’ expressing ‘the self-doubt of a man… struggling in a financial world that is very uncertain’, while the prosecution dubs it a tale of ‘Wall Street greed’, full of ‘lies, trickery and deception’.
In the email, sent late at night in 2007, Frenchman Tourre expresses doubts about the sub-prime mortgage market, saying the ‘whole building is about to collapse any time now’.
He goes on to justify himself, saying he’s ‘not feeling too guilty about this'.
‘The real purpose of my job is to make capital markets more efficient and ultimately provide the US consumer with more efficient ways to leverage and finance himself, so there is a humble, noble and ethical reason for my job ;) amazing how good I am in convincing myself!!!’
Did Tourre really see his actions as noble? The Securities and Exchange Commission says not. It’s accused Tourre of luring investors into buying into Abacus by conspiring with hedge fund Paulson & Co. Tourre allegedly said Paulson was backing the vehicle – when in fact, it had taken a short position, betting against it.
The real challenge for lawyers in this trial is explaining the financial terminology to the jury. So far, they’ve been creative: Judge Katherine Forrest used Little Red Riding Hood as an allegory, saying Tourre had handed Little Red Riding Hood an invitation to her grandmother’s house without telling her the invitation had been written by the Big Bad Wolf.