Remember when fraud litigation against JPMorgan, Wells Fargo, Bank of America and other financial institutions was far in the future, and Goldman Sachs was the lawsuit du jour? Unfortunately for former Goldman Sachs VP Fabrice Tourre, the Securities and Exchange Commission (SEC) hasn’t forgotten either, and now he’ll have to pay.

The SEC ruled that Tourre should pay $1.1 million for his part in Goldman Sachs’ failed $1 billion investment, the Commission announced on Dec. 16. The $1.1 million penalty is for fines, disgorgement and interest.

The SEC included Tourre in a 2010 lawsuit against the bank, claiming that he was primarily responsible for defrauding investors in a collateralized debt obligation (CDO). The CDO relied heavily on securities that were selected with help from hedge fund Paulson & Co. However, investors were never told of either Paulson & Co.’s involvement or that the hedge fund was taking short positions against the investments, betting that they would fail.

In an August 2013 jury trial, Tourre was found liable for fraud and intentionally misleading investors.

“These remedies are appropriate because the conduct that the SEC proved at trial was egregious,” the SEC said in a Dec. 16 brief filed in federal court in Manhattan, according to Bloomberg. “Tourre, a licensed securities professional, took the lead in structuring a financial product that was secretly designed to maximize its potential for failure.”

U.S. District Judge Katherine Forrest holds the job of enforcing the penalty. The SEC asked that Forrest impose a fine of $910,000 on Tourre and order him to disgorge $175,463 from a 2007 bonus, plus pay $62,858 in interest. According to Bloomberg, the SEC filing also seeks to bar Tourre from violating securities laws in the future.


Goldman Sachs isn’t the only financial services firm in trouble with the law. Check out these recent banking stories from InsideCounsel:

RBS agrees to pay $100 million for sanction violations

JPMorgan to double compliance budget in 2014

Wells Fargo prepares for two year ethics review to avoid future legal suits

L.A. files against banks for discriminatory lending