Poor Fab! I, for one, was utterly persuaded that he didn’t commit securities fraud by sending an email that he admitted was “not accurate” but not “false,” but the significance of that distinction seems to have eluded the jury:

A federal jury found former Goldman Sachs Group Inc. trader Fabrice Tourre liable for misleading investors in a mortgage-linked deal that collapsed during the financial crisis, delivering a historic win for a U.S. regulator eager to prove its mettle inside the courtroom.

The panel of nine jurors reached their verdict during the second day of deliberations, finding Mr. Tourre liable on six of seven claims that he violated federal securities law. … Mr. Tourre, who left Wall Street to pursue a doctorate in economics, may face a fine and a ban from the securities industry.

I think it’d be a shame to deprive the securities industry of Fab’s financial-structuring creativity and proclivity for sending embarrassing emails, but as we’ve established I’m in the minority here. Fab’s jury, anyway, seems not to share my tastes in almost anything; they “appeared distracted or drowsy as witnesses were questioned about esoteric financial matters including the structure of CDOs and credit default swaps” and “appeared more engaged when the testimony turned to Tourre’s late-night e-mails to his then-girlfriend and the difference between smiling and winking emoticons,” which is possibly a good set of priorities for deciding a securities fraud case but also possibly not.1

Poor Fab. Here is a sentence:

For the SEC, the verdict offers a rebuttal to critics who have accused the agency of seeking to make fairly junior employees, such as Mr. Tourre, scapegoats for Wall Street’s wider failings.

But of course it is exactly not that; it is just proof that the SEC is at least able to make scapegoats of those junior employees. It goes to competence but not intentions. And it’s a mixed blessing for the SEC, as its critics are already re-opening the question of “if it’s that easy to win against Fab Tourre, why aren’t you throwing all the bastards in jail?”2 The SEC has pretty much settled an Abacus-esque CDO case with each big bank,3 meaning that there’s presumably an army of Fabs still on Wall Street who’ve never been hauled before a jury. There’s a whole nother army of people who sold mortgages to Fannie and Freddie, and whose banks have now agreed to pay nine-figure fines over misrepresentations in those deals too.

Basically the list of nine-figure settlements for securities misrepresentations is endless, and the list of individuals sued for actually making those misrepresentations is Fab. Five years after the financial crisis the SEC has discovered that it can convince a jury to hold individuals responsible for those misrepresentations. Well, an individual. Just the one. Poor Fab.

Former Goldman Trader Found Liable [WSJ]
Michael Lewis: Did Goldman Sachs Overstep in Criminally Charging Its Ex-Programmer? [VF]

1. I mean, to be fair, how engaged you look to reporters is not necessarily an indication of your decision-making priorities. But, yeah. Emoticons.

2. Or at least demanding that they admit their guilt when they agree to pay nine-figure fines, a hobbyhorse that I’ve never understood but that people are really into. Like, yes, a jury has found Fab liable for fraud, and not Goldman, but on the other hand Goldman has paid $550mm in fines and Fab has not. Yet anyway. We don’t know how big the fines will be! But I don’t think he has $550 million.

3. Except the one whose CDO legal team was headed by the guy who until recently was the SEC’s director of enforcement but hey.

21 comments (hidden to protect delicate sensibilities)
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Comments (21)

  1. Posted by Infamous Fab | August 1, 2013 at 4:29 PM

    Hey, at least he didn't end up like Adoboli. I wonder what kind of stock options goldman gave him.

  2. Posted by WTF Matt? | August 1, 2013 at 4:31 PM

    "a whole nother army of people"

  3. Posted by ThugLIFO | August 1, 2013 at 4:37 PM

    Seems akin to Boris' "I'm invincible" from Goldeneye

  4. Posted by Im_a_Dude | August 1, 2013 at 4:37 PM

    yes, now the SEC, and all politicians, can get in front of the TV cameras and claim they brought to justice the perps who brought the financial crisis on.
    then they can go back to ilovetrannies.com (the SEC) and whatever it is politicians do (sext coeds, order high priced hookers from out of state, etc)

  5. Posted by Guest | August 1, 2013 at 4:44 PM

    Wasn't it pretty funny when Bloomberg put on the tape initially that he was acquitted?

  6. Posted by Yokel | August 1, 2013 at 4:44 PM

    Poor Froggy. Let me run a bath for you to swim in.

  7. Posted by lame | August 1, 2013 at 4:52 PM

    he writes informally sometimes. deal with it.

  8. Posted by guest | August 1, 2013 at 4:53 PM
  9. Posted by President Skroob | August 1, 2013 at 4:57 PM

    Why would he choose a jury trial? I mean, Fab strikes me as a bit of weasel, but it would seem that he didn't technically violate the relevant Federal securities codes. I'm thinking you'd be better off with a bench trial – a judge seems much more like to understand the nuances of securities law and thus the validity of Fab's defense… But present that technical defense to an average group of dumbasses/federal jury – and throw in the fact that Fab is bit of weasel – and you end up with a bad conviction.

  10. Posted by Fabulous Fap | August 1, 2013 at 5:04 PM

    Let them eat tranche!

  11. Posted by Incitatus | August 1, 2013 at 5:23 PM

    I'm with you. There's zero way I'd ever stake my life/liberty/property on my fellow citizens' ability to understand the difference between "checking" and "savings," much less the foibles and intricacies of IB deals.

  12. Posted by Fab | August 1, 2013 at 5:32 PM

    L'entire financial crisis, c'est moi!

  13. Posted by OWS peanut gallery | August 1, 2013 at 5:33 PM

    Rot in jail, bankster scum! What? Oh….

  14. Posted by Al Czervik | August 1, 2013 at 5:49 PM

    I don't like your cuffs, I don't like your cuffs, I don't like your cuffs. A man's cuffs should be even with the tip of his peepee! Yours are all the way down to your balls!
    -Count DeMoney

  15. Posted by DingALing | August 1, 2013 at 6:00 PM

    What's wrong with in-state girls? We work too you know…

    A. Dupree

  16. Posted by guest | August 1, 2013 at 6:02 PM

    More and more leverage in the system, The whole building is about to collapse anytime now! Only potential survivor, the fabulous Goldman Sachs standing in the middle of all these complex, highly leveraged, exotic trades we created without necessarily understanding all of the implications of those monstrosities!!!

    -L. Blankfein

  17. Posted by GS Analyst Class 14 | August 1, 2013 at 6:28 PM

    Hey guys, where'd the semicolon key go?

  18. Posted by Guest | August 1, 2013 at 6:57 PM

    Perhaps it was you guys who had made the jury "distracted or drowsy" during testimony and helped hurry the verdict in their rush to get back to you

  19. Posted by Catamite Capital | August 1, 2013 at 7:37 PM

    Bonjour, everyone! Don't worry. Everything is bon!

  20. Posted by Rip Tickle | August 1, 2013 at 9:12 PM

    Does this mean the influx of french people in trading will decline? Did their bubble pop?

  21. Posted by Valencia | August 2, 2013 at 5:46 AM

    hahah Don't worry. Everything is bon! – Great! :)