On Thursday morning, a New York City judges found former Goldman Sachs trader Fabrice “Fabulous Fab” Tourre legally responsible on six of seven charges having its root from a massive mortgage securities fraud case.
It was the first win before a jury for the Securities and Exchange Commission in a long thread of cases related to the financial crisis.
Tourre was part of a team which used to build a synthetic CDO known as Abacus, and was an investment vehicle built from risky home loans allowed clients to bet for or against its success in 2007.
The agency held Tourre responsible for hiding from investors the fact that hedge fund Paulson & Co helped select mortgages for Abacus, and then bet against the deal. In 2008 when the mortgage market smashed, those who bet on the underlying mortgages lost about $1 billion.
Aforementioned the financial crisis on Wall Street, to some people Tourre’s case has come to signify the bad behavior that ran unrestrained. As a proof, the prosecution showed emails Tourre sent to his girlfriend that included one in which he flamboyantly described the fragile state of the financial system, as well as his personal role in it.
The most protuberant culprits are Daniel Mudd, former CEO of Fannie Mae, and Richard Syron, former chairman and CEO of Freddie Mac.
The agency will have to start filing new lawsuits with the swiftness if it wants to spread the blame further. The Marketplace says that the bill of limitations on certain securities law violation will be coming up in one month time.