The decision to call former Goldman saleswoman Gail Kreitman out of order comes a day after a combative back and forth between the SEC and one of its top witnesses: Paolo Pellegrini, a former lieutenant to billionaire hedge-fund manager John Paulson. Her testimony is important because she may be the first witness to link Mr. Tourre to statements made to ACA Financial Guaranty Corp., which acted as the portfolio-selection agent on the transaction. The SEC has alleged that Mr. Tourre hid from ACA that Mr. Paulson's hedge fund, Paulson & Co., planned to bet against the deal. As part of her testimony, the SEC is expected to play a tape recorded by ACA's phone system in which Ms. Kreitman reportedly says that Paulson was taking a "hundred percent of the equity" in the deal, implying it was betting the instrument's value would rise, not fall...Matthew Martens, a SEC lawyer, said Thursday that the regulator decided to change the order of its witnesses in an effort to speed the presentation of its case. The SEC is considering limiting the testimony of or not calling at all David Gerst, one of Mr. Tourre's closest colleagues at Goldman, Mr. Martens said. Mr. Gerst had been expected to testify as early as Thursday. The late notice didn't make the defense happy: they said the parties had reached a handshake agreement to give the other side 48 hours notice before a witness was called. [WSJ]
Fabulous Fab To Take The Stand Next Summer
Three years after Fabrice Touree was sued by the Securities and Exchange Commission for allegedly misleading investors, the (soon-to-be) Dr. of Economics and Love will go to trial, assuming finals don't pose a conflict. U.S. District Judge Katherine Forrest in Manhattan set the July 15 trial date at the end of a hearing in which an SEC lawyer argued that she should reinstate some claims against Tourre that another judge dismissed earlier in the case. Last year, U.S. District Judge Barbara Jones threw out some of the SEC’s claims after Tourre argued that he couldn’t be held liable under U.S. securities law for transactions that occurred outside the country. The SEC argued today that the claims should be reinstated because of a recent appeals court ruling that applied a broader definition of “domestic securities transaction” than the one used by Jones. Tourre’s case was assigned to Forrest last week. Tourre, 33, who is studying for a Ph.D. in economics at the University of Chicago, wasn’t present in the courtroom today. His lawyer, Pamela Chepiga, told Forrest that she will check with her client to make sure there is no conflict between his exams and the trial date. Goldman Sachs’s Tourre Gets July 15 Trial Date [Bloomberg]