Goldman Sachs Group Inc. executive director Fabrice Tourre had “very preliminary” talks with the U.S. Securities and Exchange Commission to settle the agency’s civil fraud claims against him, an SEC lawyer said.
“I would characterize us as having very preliminary discussions along those lines a while back, and that’s all,” SEC lawyer Lorin Reisner said in a hearing today in U.S. District Court in Manhattan.
The SEC sued Goldman Sachs and Tourre in April, over claims the firm misled investors in collateralized debt obligations linked to subprime mortgages. Tourre, the only Goldman Sachs executive sued individually, remains in the case after the firm agreed to a $550 million settlement last month.
The settlement includes a $300 million fine and $250 million in restitution for investors. The penalty is the largest ever levied by the Securities and Exchange Commission against a Wall Street firm, the SEC said. Goldman Sachs acknowledged it made a “mistake” and that marketing materials for the instruments had “incomplete information,” the agency said.
U.S. District Judge Barbara Jones in Manhattan granted final approval to the settlement on July 20.
Jones’s approval of the accord came a day after Tourre filed court papers asking her to dismiss the lawsuit against him. Tourre denied making any materially misleading statements or omissions related to the sale of Abacus 2007-AC1 CDOs linked to subprime mortgages.
In the hearing today, before U.S. Magistrate Judge Michael Dolinger, the parties discussed possible outlines for pretrial discovery in the case. Reisner said the SEC is turning over 9 million pages of investigative documents to Tourre’s lawyers. He said the agency may seek to take pretrial testimony from 25 witnesses.
Pamela Chepiga, one of Tourre’s lawyers, said Tourre may seek to take testimony from as many as 50 witnesses. Chepiga said the parties may also need to pursue evidence in the U.K. and Germany in addition to the U.S.
“This is an enormously complicated case,” Chepiga said.
Dolinger set an Oct. 4 hearing to discuss the progress of discovery in the case.
The case is SEC v. Goldman Sachs, 10-CV-3229, U.S. District Court, Southern District of New York (Manhattan).