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Manhattan federal court charges Fabrice Tourre with $1bn fraud

SEC wins in high-profile trial.

A five-member jury of Manhattan federal court has charged Fabrice Tourre, a former vice president of Goldman Sachs Group, with fraud in six of seven counts for his role in a failed mortgage deal that squeezed $1bn from investors.

Tourre was accused by the US Securities and Exchange Commission (SEC) in April 2010 for misleading investors in Abacus 2007-AC1.

Andrew Ceresney, co-director of enforcement division at SEC, was quoted by Reuters as saying: “We are gratified by the jury’s verdict. We will continue to vigorously seek to hold accountable, and bring to trial when necessary, those who commit fraud on Wall Street.”       

Further orders on the issue will be given by the US District Judge Katherine Forrest. This may include imposing a fine on Tourre and/or distribution of any illegal profits earned by him.

Tourre, who agreed of earning $1.7m in 2007, may also face a life time ban from the securities industry.

Meanwhile, Forrest urged SEC and Tourre to submit proposals by 23 August 2013 to proceed further in the case.

Earlier in July 2010, Goldman Sachs settled Abacus issue with the SEC by paying a penalty of $550m without admitting or denying any wrongdoing.

The federal court’s decision in this high-profile fraud case is seen a victory for the SEC.