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French trader only person cited in Goldman fraud investigation

Reuters

A French trader was the only person named when financial regulators charged the US investment bank Goldman Sachs with fraud. Fabrice Pierre Tourre, a former executive at the bank, is accused of misleading investors.

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According to the US Securities and Exchange Commission, Tourre anticipated the collapse of mortgage-back securities, which was a key contributor to the global financial crisis in 2008.

“The whole building is about to collapse anytime now,” Tourre wrote in an email to a friend in a January 2007, according to the SEC 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 monstruosities [sic] !!!”

The SEC names Tourre as the creator of a financial product that packaged toxic mortgages into a securities fund, which he sold to investors who did not realize they were toxic. The financial watchdog says Goldman did not tell investors that a major hedge fund had chosen the securities so it could bet against them.

Goldman allegedly failed to reveal that Paulson & Co, one of the world’s largest hedge funds, had paid to structure securities fund so that it could take speculative positions against it.

The New York-based hedge fund has not been accused of wrongdoing.

The SEC says the fraud cost investors a billion dollars (741 billion euros).

Goldman denied the charges, saying they are “completely unfounded in law and fact”, and that it would "vigorously contest them and defend the firm and its reputation."

Tourre received a bachelor’s degree in math at a top French engineer school, the Ecole Centrale Paris, in 2000, according to his LinkedIn profile. He graduated the next year with a master’s degree in operations research from Stanford University in California.

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