The U.S. Securities and Exchange Commission expanded its complaint against Goldman Sachs Group Inc. trader Fabrice Tourre, accusing him of giving the company “substantial assistance” as it misled investors in a product linked to subprime mortgages.
The SEC, which reached a $550 million settlement with Goldman Sachs in July, included the new claim against Tourre in an amended complaint filed Nov. 22 at U.S. District Court in New York. The London-based trader, accused of helping the Wall Street firm defraud investors in a product known as Abacus, may face trial after failing to win dismissal of the SEC’s case.
Goldman Sachs and Tourre were sued April 16 by the SEC, which accused them of failing to tell investors that hedge fund Paulson & Co. helped pick the underlying securities for the collateralized debt obligation and planned to bet against them.
The SEC “is clearly preparing for this case to go the distance,” said Jacob Frenkel, a partner at Potomac, Maryland- based law firm Shulman Rogers Gandal Pordy & Ecker. “They want to make sure that their allegations are sufficiently broad” so that a jury could still find him responsible for aiding fraud even if they determine he wasn’t the primary violator, he said.
Tourre “played a principal role” in the offer and sale of the securities to Dusseldorf, Germany-based IKB Deutsche Industriebank AG, and “was aware” of marketing materials that omitted Paulson’s role in selecting underlying securities for Abacus, the SEC said.
The case is SEC v. Goldman Sachs, 10-CV-3229, U.S. District Court, Southern District of New York (Manhattan).
To contact the editor responsible for this story: Lawrence Roberts at email@example.com.