Home Business NewsFinance Fabulous Fab's love letter: "I'm not guilty… there is a noble reason for my job"

Fabulous Fab's love letter: "I'm not guilty… there is a noble reason for my job"

by LLB Editor
16th Jul 13 12:03 pm

The trial of former Goldman Sachs banker Fabrice Tourre, known as ‘Fabulous Fab’, began with a love letter yesterday. Tourre is charged with fraud for allegedly misleading investors into a backing a sub-prime mortgage vehicle.

Judges in a Manhattan court were shown an email Tourre had sent his girlfriend, another Goldman Sachs employee, explaining that he thought the sub-prime market would crash.

The US Securities and Exchange Commission (SEC) claims that Tourre and Paulson & Co, the hedge fund run by billionaire John Paulson, worked together to lure buyers by telling them that house prices would rise and that Paulson was also backing the vehicle. In fact, Paulson is known to have been taking a short position on house prices (i.e. setting up trades that would make money if house prices fell) as he wasn’t confident about the rise in house prices.

In the email, Tourre said that the “whole building is about to collapse any time now,” but he’s not feeling “too guilty”: “Anyway, not feeling too guilty about this, the real purpose of my job is to make capital markets more efficient and ultimately provide the US consumer with more efficient ways to leverage and finance himself, so there is a humble, noble and ethical reason for my job 😉 amazing how good I am in convincing myself!!!” [sic].

The SEC said that the email showed Tourre’s “state of mind” and that it’s a classic example of “Wall Street greed” and “lies, trickery and deception”. Tourre’s lawyers say that the emails reveal the 34-year-old’s romance and his self-doubt.

“It’s an old-fashioned love letter, sent late at night after a long day’s work,” said his lawyer, Pamela Chepiga. “It is his expression of deep love from an unworthy suitor…what this late night email expresses is the self-doubt of a man about whom there is nothing fabulous, struggling in a financial world that is very uncertain.”

The judge, Katherine Forrest, likened the case to the fairytale of the Little Red Riding Hood where Tourre “handed Little Red Riding Hood an invitation to grandmother’s house while concealing the fact that it was written by the Big Bad Wolf”.

The case will be heard in the course of the next three weeks.

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