Corporate & Securities Law

Fabrice Tourre Set For Bonus Amid Fraud Charges?

By Keith Griffin

The ?Fabulous Fabrice Tourre,? as he refers to himself in an e-mail cited in an April 16 securities fraud lawsuit filed by the Securities and Exchange Commission, is reportedly set to rake in a massive bonus courtesy of his employer Goldman Sachs.

An April 18 story in the Guardian first reported the bonus news, which is set to be announced on April 20 by Goldman Sachs CEO Lloyd Blankfein as part of the first-quarter 2010 financial results for the bank.

News of Tourre?s potential bonus comes on the heels of the SEC?s lawsuit against the VP and Goldman Sachs over claims involving a package of collateralized debt obligations - called Abacus 2007-AC1 - that regulators contend was designed to fail. According to the civil complaint, Tourre knew that the hedge fund, Paulson and Company, had helped select the assets backing Abacus while at the same time betting on it fail.

The SEC further alleges that Tourre misled a collateral manager, ACA Management, about Paulson?s role.

?Marketing materials for Abacus 2007-AC1 were false and misleading because they represented that ACA selected the reference portfolio while omitting any mention that Paulson, a party with economic interests adverse to CDO investors, played a significant role in the selection of the reference portfolio,? the complaint reads.

The SEC?s complaint also includes potentially damning e-mails from Tourre about Abacus. One of those e-mails states the following:

?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!!!?

According to an April 19 article in the Wall Street Journal, Tourre received a paycheck of more than $2 million in 2007. The compensation was reportedly due in part to the success of the CDO at the center of the SEC?s lawsuit. Meanwhile, Tourre apparently has taken an ?indefinite vacation? but remains employed at Goldman Sachs.

Full post as published by Representing Investors on April 20, 2010 (boomark / email).