Six years ago, an unknown Frenchman named Fabrice Tourre was a 28-year-old kid living the dream as a highly paid salesman at Goldman Sachs (GS). Today, "Fabulous Fab" is now internationally known for defrauding investors over a $1 billion in mortgage bond deal that blew up.
Since this was a civil trial, not criminal, Tourre was found liable by a Manhattan jury and will be subject to fines and the possibility of a lifetime ban from the securities industry; a business that is probably not brimming with offers for a convicted expat with a PhD in finance.
As my co-host Jeff Macke and I discuss in the attached video, while this trial took on outsized importance and garnered disproportionate coverage given the relatively small fish in the dock, it is clear that it won't be the last case the Feds bring forth.
"Guys like him at Goldman should be terrified," Macke says. "I like this ruling but my problem with it is that it takes away the attention from where it should be, which is much higher up the chain."
To be clear, Goldman settled with the SEC over the same matter in 2010, paying a record $550 million fine and admitted it made a mistake by selling an investment to one client without disclosing that another client (hedge fund manager John Paulson) had secretly built it to fail.
For the SEC's part, the case marks a big win and the first time that Wall Street's top regulator has won a jury trial related to fraud and the financial crisis.
Even so, nabbing Fab is highly unsatisfying and garners little more than a shoulder shrug in many circles. As Macke says, "I'm fine with (Tourre) being prosecuted. It's a witch hunt. They looked for a scapegoat. But I want the top. If you're going to send a message, you've got to go after the big wigs too."
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- Fabrice Tourre