John Paulson will not testify in Tourre trial
Hedge fund billionaire John Paulson will not testify in the high-profile civil case against former Goldman Sachs bond trader Fabrice Tourre, who is on trial in federal court in New York.
The U.S. Securities and Exchange Commission accuses Tourre of failing to tell investors that 57-year-old Paulson's hedge fund firm intended to bet against Goldman Sachs' Abacus 2007-AC1. The $2 billion offering was tied to subprime mortgage bonds and known as a synthetic collateralized debt obligation.
Tourre denies wrongdoing.
This morning, U.S. District Judge Katherine Forrest cited a July 28 letter by Tourre's lawyers saying they no longer plan to call Paulson and others on their witness list to testify.
Sean Coffey, a lawyer for Tourre, confirmed the legal team would not be calling Paulson, as did a spokeswoman for the Southern District of New York in an emailed statement.
Paulson's firm had helped to select the securities that were packaged into the deal. The SEC says Tourre told investors that Paulson's firm was investing in Abacus, suggesting he expected the price of the securities to rise, when actually the hedge fund was shorting it.
The shorting of the deal was part of Paulson's broader bet against the U.S. housing market in 2007, which earned him Wall Street fame and billions of dollars.
The trial may draw to a close sooner than expected. Closing arguments may take place Tuesday or Wednesday, Forrest said on Monday morning.
"Summations are expected to be heard on Wednesday, though this is subject to change," the court spokeswoman said.