Business

Not so fast ‘Fab’: Jury finds ex-banker Tourre misled investors

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He’s no longer the “Fabulous Fab.”

Former Goldman Sachs banker Fabrice Tourre was found liable of defrauding investors yesterday in a complex $1 billion mortgage scheme that imploded during the financial crisis.

In a much-needed win for federal regulators, a Manhattan federal court jury found Tourre liable on six of seven counts of fraud in the closely watched civil case brought by the Securities and Exchange Commission.

The SEC had come under fire for being asleep at the switch and not holding more Wall Street executives and firms accountable for their roles in selling toxic mortgages — which helped push the US economy into the Great Recession.

The 34-year-old Tourre faces fines and a lifetime ban from the securities industry — both to be determined later by the judge.

Tourre is said to be considering an appeal of the case.

“We are gratified by the jury’s verdict,” said Matthew Martens, the SEC’s lead lawyer, as he left the courtroom.

Goldman quickly settled the SEC’s case against the bank — paying a $550 million fine, but neither admitting nor denying any guilt.

Tourre sat calmly in the courtroom as the court’s deputy read the verdict for all seven counts he was facing.

The jury — five women and four men — reached a verdict in its second day of deliberations after more than two weeks of testimony from about a dozen witnesses, including Tourre.

Tourre — who was a 28-year-old mid-level trader on the fast track to the easy life at Goldman back in 2007 when he misled investors on a mortgage-backed security — passed the time during jury deliberations by reading a volume of Edward Gibbons, “History of the Decline and Fall of the Roman Empire.”

The verdict marks a big win for the Wall Street watchdog, whose record in trial cases moves to 14-3 — and it arguably bolsters the agency’s efforts to chase down other wrongdoers.

The SEC accused Tourre and Goldman of misleading investors in a synthetic collateralized debt obligation, called Abacus, by failing to disclose that billionaire John Paulson’s hedge fund was allowed to pick the assets that went into the deal.

Tourre also misled investors — who ended up losing $1 billion when Abacus imploded — about Paulson’s bet against the CDO.

The jury found Tourre not liable of breaching Rule 10b-5(b) or making a material untrue or misleading statement intentionally.

“As a firm, we remain focused on being more transparent, more accountable, and more responsive to the needs of our clients,” Goldman said in a statement.

The gold-plated firm is paying Tourre’s legal bills.

Critics may say the SEC victory is minor given that Tourre — called “Fabulous Fab” by a colleague — was just a mid-level employee at Goldman.

However some lawyers believe the outcome of the trial marks a good step for the SEC.

“Today we catch the minnow: tomorrow the whale,” said Anthony Sabino, professor of law at St. John’s University.