FABRICE TOURRE, the Goldman Sachs banker at the centre of fraud allegations against the firm, has agreed to testify and may defend his actions at a US Senate hearing next week.
Mr Tourre (31), who was accused by the US Securities and Exchange Commission (SEC) of misleading investors in a collateralised debt obligation (CDO), will appear before the Senate permanent subcommittee on investigations on April 27th, along with Goldman Sachs chief executive Lloyd Blankfein. Mr Tourre is expected to tell the panel he did nothing wrong.
Goldman Sachs, the most profitable firm in Wall Street history, was sued by the SEC on April 16th.
Regulators claimed the firm and Mr Tourre misled investors by failing to disclose that Paulson and Co, the hedge fund run by billionaire John Paulson, helped select loans for the CDO and then bet against them. Mr Tourre, the only individual named in the SEC case, was “principally responsible” for creating and marketing the CDO known as Abacus 2007-AC1, the agency said in its complaint.
“The whole building is about to collapse anytime now,” Mr Tourre wrote to a friend in a January 2007 e-mail, according to the complaint. “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 monstrosities!!!”
In a letter published today in this newspaper, Goldman Sachs managing director Lucas van Praag said the matter was one of “disclosure”. He said Goldman Sachs would “never condone an employee misleading anyone”, adding that the company takes its responsibilities as a financial intermediary “very seriously”. – (Bloomberg)
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