Mortgage

Former Goldman Sachs employee found liable for securities fraud

SEC had accused Fabrice Tourre of misleading participants in mortgage-linked deal

In what some are describing as a historic win for regulators, a federal jury today found Fabrice Tourre, a former Goldman Sachs vice president, liable for deceiving investors in a mortgage-linked deal that imploded during the financial crisis. The U.S. Securities and Exchange Commission alleged that Tourre helped create a collateralized debt obligation (CDO) that would allow investors to place bets for and against a pool of mortgage bonds, so that hedge fund Paulson & Co. could place a short bet against the mortgages. Tourre was accused of misleading the bond insurer picked to select the mortgage bonds, ACA Financial Guaranty Corp., into thinking that Paulson & Co. planned to take a long position in the CDO. Tourre was also accused of hiding Paulson & Co.'s role in engineering the CDO from investors who took long positions. Paulson & Co. ultimately made $1 billion shorting the CDO, The Associated Press reported. In 2010, Goldman Sachs settled SEC allegations...