A federal judge on Wednesday limited the extent to which former Goldman Sachs vice president Fabrice Tourre can argue that he was acting on the advice of company lawyers in his defense against charges that he misled investors.
The ruling could be another setback for Tourre ahead of his trial on July 15, after the judge earlier this month rejected his argument that the Securities and Exchange Commission should narrow its case against him.
The government accuses Tourre of failing to tell investors in a collateralized debt obligation (CDO) known as Abacus that hedge fund Paulson & Co. had helped choose the underlying mortgages and then bet against it.
In a ruling on Tuesday, District Judge Katherine Forrest said she would "limit Tourre's ability to focus on the presence and participation of lawyers" at his trial.
Forrest said Tourre's opening statements should not include references to the presence and involvement of lawyers at meetings where Abacus was discussed. She also said she would provide a "limiting instruction" preventing his attorneys from referring to lawyers in a way that suggests Tourre relied on them to vet the Abacus transaction.
But, she stopped short of precluding Tourre's lawyers from presenting any evidence that showed the presence of lawyers, which the SEC had requested.
"In short, Tourre will not be precluded altogether from saying the words 'counsel,' 'lawyer,' or 'attorney,"' Forrest wrote in her decision. "But nor will he be permitted to zero in on the presence or involvement of lawyers for the sake of highlighting their presence or involvement."
At a hearing on Friday, the SEC had asked the judge to preclude Tourre from presenting an "advice of counsel" argument in which the approval of the transaction by attorneys at Goldman and other entities involved would essentially shield him from fault. Goldman agreed to pay $550 million to settle its part of the case, without admitting wrongdoing, in 2010.