(Reuters/Brendan McDermid)

Trader Fab Tourre found liable for fraud, won't face jail

A symbol of Wall Street greed, the former Goldman trader was found liable for six fraud claims


Natasha Lennard
August 2, 2013 5:48PM (UTC)

Fabrice "Fabulous Fab" Tourre became a symbol of the sort of Wall Street greed and recklessness that underpinned the credit crunch and subsequent financial crisis in 2008. No top executives have faced jail time, despite numerous proven cases of fraud and malfeasance being exposed. Fab Tourre, not a top executive, but a celebrated trader, will also not face jail time, despite being found liable by a New York jury this week in six claims of fraud.

In instances typical of the actions that help build a mortgage bubble bound for burst, Tourre was accused by the SEC of misleading investors to invest in sub-prime mortgage securities that he knew were doomed to fail, while advising another Goldman client to bet against the securities to make millions as the stocks crashed. The Guardian's Adam Gabbatt noted, "The manoeuvre ended up making $1bn for [Goldman client] Paulson and Co and its wealthy president, John A Paulson, and millions of dollars in fees for Goldman. The SEC also sought to show that it helped earn Tourre a bonus that boosted his salary to $1.7 million in 2007."

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Although a key player in using the Abacus product, as it was known, to mislead investors, Tourre was only a mid-level executive at Goldman. It's worth noting that Fabulous Fab's seniors in the firm, who also walked away with immense fortunes, faced no charges. Tourre was the only individual to face charges over Abacus. As Gabbatt noted, Tourre's arrogance, swagger and a series of indicting emails made him an easy target for SEC action against the big banks -- which has been little more than symbolic in the wake of the financial crisis. Via Gabbatt:

In [an] email, sent as the markets teetered on the edge of panic, Toure referred to himself using the nickname "Fabulous Fab". The moniker leant itself to the idea of corporate greed and vanity running riot at a time when investors were losing savings.

"The whole building is about to collapse anytime now … Only potential survivor, the fabulous Fab … standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstruosities [sic]!!!" Tourre wrote.

 


Natasha Lennard

Natasha Lennard is an assistant news editor at Salon, covering non-electoral politics, general news and rabble-rousing. Follow her on Twitter @natashalennard, email nlennard@salon.com.

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Related Topics ------------------------------------------

Abacus Fabrice Tourre Fabulous Fab Financial Crisis Fraud Goldman Sachs Sec Wall Street

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