'Fabulous Fab' seeks to toss fraud verdict in SEC case
A former Goldman Sachs vice president who was found liable for securities fraud over a failed mortgage transaction asked a federal judge to dismiss the Securities and Exchange Commission case against him or set a new trial.
Fabrice Tourre said his jury erred in finding him liable on six of the seven civil charges he faced over the transaction, which the SEC said caused $1 billion of investor losses, because the evidence was inadequate or was never presented in court.
Letting the verdict stand "would work a manifest injustice to Mr. Tourre," his lawyers wrote in a Monday night filing in the U.S. District Court in Manhattan.
SEC spokeswoman Judith Burns had no immediate comment.
The Aug. 1 verdict was the SEC's first major courtroom victory in a case stemming from the financial crisis.
Jurors found Tourre, 34, liable for misleading investors in the 2007 synthetic collateralized debt obligation Abacus 2007-AC1, by concealing how hedge fund billionaire John Paulson helped construct the transaction and bet it would fail.
(Read more: Mortgage alert: Borrowers change how they cheat)
Tourre was also held liable for misleading ACA Capital Holdings, which like Paulson also chose assets for Abacus, into believing Paulson's firm would be an equity investor in the CDO.
Goldman agreed in a July 2010 settlement with the SEC to pay $550 million, without admitting wrongdoing.
No other individuals were charged, prompting Tourre's lawyers to complain that the SEC built its case aroud the premise that "Mr. Tourre, and Mr. Tourre alone" was responsible for the alleged fraud.
In his filing, Tourre said the jury finding that he schemed to defraud ACA should be thrown out because it was premised on the charge on which he was held not liable.
(Read more: Forget Goldman Sachs, the government's after JP)
He also said there was no evidence that his alleged untrue statements influenced his 2007 salary or bonus, or that Abacus was a "domestic" transaction that justified liability under U.S. securities laws.
Tourre also said U.S. District Judge Katherine Forrest, who oversaw the trial, made a mistake in not letting jurors consider whether swaps involving Goldman, ACA and the former ABN Amro were "security-based," potentially subjecting him to liability.
Goldman has been paying legal bills of Tourre, who is now pursuing a doctorate in economics at the University of Chicago.