Update | Ex-Goldman banker Tourre denies creating subprime 'monstrosities'
Failed US$1b subprime mortgage investment was not designed to fail, court told
Fabrice Tourre has previewed his defence against civil fraud claims over a failed US$1 billion investment, telling jurors about his former life as a 28-year-old Goldman Sachs Group vice-president, working until midnight, six days a week on a vast trading floor, supervising no one.
The US Securities and Exchange Commission claims Tourre intentionally misled participants in a 2007 deal known as Abacus about the role played by Paulson & Co, the hedge fund run by John Paulson. The SEC claims Tourre hid that Paulson helped choose the portfolio of subprime mortgage-backed securities underlying Abacus, then made a US-billion-dollar bet it would fail.
Tourre's lead lawyer, Pamela Chepiga, began questioning her client on Thursday afternoon, seeking to minimise Tourre's responsibility for the transaction by showing it was reviewed by dozens of people at Goldman Sachs.
Abacus, which closed in April 2007, turned worthless when the housing market crashed, losing US$1 billion for investors who bet the subprime mortgage bond portfolio would perform well.
Answering Chepiga's questions, Tourre denied misleading anyone about Paulson's role in Abacus and said he thought ACA Management, the company that was hired to select mortgage bonds for Abacus, knew the hedge fund was shorting the deal.