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Reuters

Testimony has ended in the civil fraud case of Fabrice Tourre, with lawyers for former Goldman Sachs trader not calling any witnesses before the US Securities and Exchange Commission’s case goes to a Manhattan federal jury.
Tourre’s lawyers had been expected to call witnesses including hedge fund billionaire John Paulson to testify on his behalf.
Instead, his lawyers asked the presiding judge to take the case away from the jury and rule in Tourre’s favour, which, as expected, she rejected.
“There is a lot of evidence the jury is entitled to weigh,” US District Judge Katherine Forrest said.
Closing arguments will begin on Tuesday morning, and Forrest said jury deliberations may begin on Wednesday.
The SEC accused Tourre of not disclosing to investors that Paulson’s hedge fund firm, Paulson & Co, selected mortgage securities tied to a 2007 deal called Abacus 2007-AC1 and planned to bet against it.
The SEC also said Tourre misled ACA Capital Holdings, the company brought in to select assets linked to Abacus, into believing Paulson would be an equity investor in the US$2 billion (HK$15.5 billion) synthetic collateralized debt obligation offering.
Investors in Abacus lost about US$1 billion, while Paulson made about that same amount betting against it.
Tourre has denied wrongdoing. Goldman Sachs Group Inc , originally a co-defendant, agreed in 2010 to settle with the SEC for US$550 million without admitting wrongdoing.
The SEC rested its case after playing a video deposition of Michael Nartey, a former Goldman employee in London who marketed Abacus notes to IKB Deutsche Industriebank, one of the investors the SEC says was burned by the deal.
In total, the SEC introduced testimony from 11 witnesses who appeared live or gave depositions.
Tourre testified for three days. While his lawyers did not call any other witnesses, eight the SEC called were on Tourre’s witness list too.
Jurors may consider Tourre’s decision not to call other witnesses a plus for the defence, said Robert Mintz, a former federal prosecutor and now a partner at McCarter & English.
“It’s a sign that the defence believes that the SEC has not met its burden of proof,” he said.
Paulson at the time of the Abacus deal was engaged in a broader bet against the US housing market in 2007. The bet earned him Wall Street fame and billions of dollars.
As recently as July 19, Tourre’s defence team had said it planned to call Paulson. Testimony had been expected to continue through at least much of this week.


SEC fraud case against ex-Goldman trader Tourre in home stretch

Former Goldman Sachs trader Fabrice Tourre. Photo: Reuters

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