NEW YORK (AP) - A once high-flying Goldman Sachs trader dubbed “Fabulous Fab” was ordered Wednesday to pay more than $825,000 in one of the prominent cases stemming from the mortgage meltdown that helped spark the Great Recession.
Ruling in a civil case that regulators called a symbol of “Wall Street greed,” U.S. District Judge Katherine Forrest decided Fabrice Tourre should pay a $650,000 penalty and give up more than $175,000 of his $1.5 million-plus bonus for 2007.
The case was considered one of the most significant legal actions related to the collapse of mortgage-backed securities, the subsequent financial crisis and the conduct of Wall Street banks that sold the securities. Tourre was found liable after a trial last summer.
Tourre, now a doctoral student in macroeconomics at the University of Chicago, said he was weighing his next move in what his lawyers have depicted as a case of scapegoating.
“I remain deeply grateful for the unwavering support of my family and friends as I consider potential next steps in the legal process,” he said, but added that he was focused on pursuing his academic career.
The federal Securities and Exchange Commission, which sued Tourre, had asked for higher penalties but hailed the decision as a strong message nonetheless.
“The ruling reflects the SEC’s intent of pursuing meaningful sanctions to punish individuals responsible for misconduct and deter others from violating the federal securities laws,” SEC Enforcement Director Andrew Ceresney said in a statement.
The SEC initially also sued Goldman Sachs, which settled in 2010 by paying a record $550 million fine without admitting or denying wrongdoing. The bank declined to comment Wednesday.
The SEC said Tourre, a French-born Stanford University graduate who became a Goldman vice president, duped institutional investors about subprime mortgage securities that he knew were fated to sour.
His deceit paved the way for a valued Goldman hedge fund client, Paulson & Co. Inc., to cash in by betting against the investment, the SEC said. While the investors lost close to $1 billion, Paulson - headed by billionaire John A. Paulson - made $1 billion, and Goldman garnered millions of dollars in fees.
Tourre’s attorneys depicted him as a financial fall guy for an economic disaster propelled by forces beyond him. They noted that many similar securities crashed after 2007.
Forrest said Tourre misled investors by email, phone and via marketing materials over seven months of deception.
“He has shown no remorse or contrition,” she added.
She barred him from asking Goldman to pay for the penalties.
___
Associated Press writer Marcy Gordon in Washington contributed to this report.
Please read our comment policy before commenting.