Not-so-'Fabulous' Goldman Sachs banker found liable for fraud

'Fabulous' Fabrice Tourre cost his clients $1bn in a sub-prime mortgage scam, a US court found today.

by Emma Haslett
Last Updated: 02 Aug 2013
That was quick: just two weeks ago jurors were being serenaded with excerpts from a ‘love letter’ from ‘Fabulous’ Fabrice Tourre, the former Goldman Sachs banker who stood accused of playing a part in a massive mortgage securities fraud.

Now, the nine-person jury has found him liable for six of the seven charges against him, meaning he is likely to be fined and banned from the financial industry.

The fraud involved diddling investors into thinking a large hedge fund, Paulson & Co, had backed a sub-prime mortgage vehicle called ‘Abacus’, when in fact it was betting against it. The fraud was at the height of the sub-prime mortgage boom – so when the market collapsed, Abacus investors lost $1bn (£661m).

Tourre is one of the first bankers to be held accountable for their part in the sub-prime mortgage crisis.

His conviction is a small triumph to those who have campaigned for bankers seen as responsible for the sub-prime mortgage crisis to be punished. But others want institutions – the Vampire Squid chief among them – to be held accountable for what they’ve done. The US’ Securities and Exchange Commission, which took Tourre to court, has already tried to pursue Goldman over Abacus, but it ended up settling out of court.

Tourre seems to have reconciled himself to becoming the ‘face’ of the sub-prime mortgage crisis. In an interview with the Wall Street Journal, he admitted it’s ‘going to stay with me forever’.  

‘I know the point of view of many people in the world is that I’ll probably look like a bad guy – you cannot erase Google searches. You will forever get the same articles, forever get the fabulous Fab,’ he said.

For now, the SEC seems happy, but Andrew Ceresney, co-director of its enforcement division, added: ‘We will continue to vigorously seek to hold accountable, and bring to trial when necessary, those who commit fraud on Wall Street’.

Alas - we have a feeling campaigners won’t be happy until the Vampire Squid has been vanquished altogether.

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