Sunday, April 18, 2010

Ab Fab Tourre

Edina - 'Bubble, listen, what is your job?'

Bubble - 'What is what?'

Edina - 'What do you do?'

Bubble - 'I don't really know... Nothing. Get paid!'

Edina - 'Good.'

Edina and Bubble
From the Ab Fab episode - Iso Tank

It takes good evidence to pin down charges on a company like Goldman Sachs, draped in the legal armory they are.

The evidentiary needle in the GS haystack being produced as government Exhibit 1 in the SEC's case against GS is Fabrice Tourre.
Fabrice Tourre, age 31, is a registered representative with GS&Co. Tourre was the GS&Co employee principally responsible for the structuring and marketing of ABACUS 2007-AC1. Tourre worked as a Vice President on the structured product correlation trading desk at GS&Co headquarters in New York City during the relevant period. Tourre presently works in London as an Executive Director of Goldman Sachs International.

Tourre was principally responsible for ABACUS 2007-AC1. Tourre devised the transaction, prepared the marketing materials and communicated directly with investors. Tourre knew of Paulson’s undisclosed short interest and its role in the collateral selection process. Tourre also misled ACA into believing that Paulson invested approximately $200 million in the equity of ABACUS 2007-AC1 (a long position) and, accordingly, that Paulson’s interests in the collateral section process were aligned with ACA’s when in reality Paulson’s interests were sharply conflicting.

The SEC complaint includes this self-portrait of Tourre:
Portions of an email in French and English sent by Tourre to a friend on January 23, 2007 stated, in English translation where applicable:
“More and more leverage in the system, The whole building is about to collapse anytime now…Only potential survivor, the fabulous Fab[rice Tourre]standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstruosities!!!
So does this raise the spectre of a "rogue trader" defense?

You wouldn't think so from this article:

British FSA launches probe into Goldman ops: Report
The SEC on Friday charged Goldman Sachs with defrauding and causing a loss of over $1 billion to investors by misrepresenting facts about a financial product tied to sub-prime mortgages. Charges have also been slapped against one of Goldman Sachs vice-presidents Fabrice Tourre.

The Sunday Times reported that Tourre has worked at the bank's London headquarters since late 2008.

"Goldman claims it lost money on the transaction. It also denies the SEC allegations that it gave favourable treatment to John Paulson, a billionaire hedge fund manager," the report pointed out. As per the report, some believe that Tourre has been made a scapegoat.

Quoting a senior hedge-fund source, the publication said, "with all of the guys inside the Goldman credit engine, to point the finger at some French (origin) vice-president is as credible as blaming the collapse of RBS on one of its tellers."

If your mem'ry serves you well
You'll remember you're the one
That called on me to call on them
To get you your favors done

And after ev'ry plan had failed
And there was nothing more to tell
You knew that we would meet again
If your mem'ry serves you well

This wheel's on fire
Rolling down the road
Best notify my next of kin
This wheel shall explode !

This Wheel's On Fire, theme song for AB FAB
-- Song by Bob Dylan



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