Former Goldman Sachs Group Inc. (GS:US) executive Fabrice Tourre lost a bid to bar a recorded 2007 phone call from a July 15 trial of U.S. Securities and Exchange Commission claims that he misled investors in a collateralized debt obligation.
U.S. District Judge Katherine Forrest in Manhattan today rejected Tourre’s request to punish the SEC for its delay in turning over the Jan. 17, 2007, recording of a call between Goldman Sachs saleswoman Gail Kreitman and an employee of ACA Management LLC by keeping it out of the trial. The SEC claimed that Tourre tricked ACA into becoming the portfolio selection agent for the CDO.
The SEC said Kreitman falsely told ACA, after talking with Tourre, that the hedge fund Paulson & Co. planned to take a long equity position in the CDO after helping select the assets underlying the investment. Tourre knew that Paulson really planned to take a short position, betting the value of the CDO would drop, the SEC claims.
“This is a mistake in my mind, and we are going to move beyond it,” Forrest told lawyers for Tourre and the SEC in a three-hour hearing. “The Jan. 17 call is going to come in.”
The SEC sued Goldman Sachs and Tourre in April 2010. The investment bank agreed in July 2010 to pay $550 million to settle the allegations against it. Tourre, 34, who is studying for a doctorate in economics at the University of Chicago, was present in the courtroom today.
Tiffany Galvin, a spokeswoman for New York-based Goldman Sachs, had no comment on today’s hearing.
The case is SEC v. Tourre, 10-03229, U.S. District Court, Southern District of New York (Manhattan).
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