French Goldman VP denies fraud allegations

Fabrice Tourre, a former executive of Goldman Sachs accused of defrauding investors, appeared before the US Senate Tuesday and formally denied the allegations. The young French man said he would defend himself in court.

Reuters

The 31-year-old was in 2007 a vice president of the investment bank and was in charge of creating and selling a fund that the SEC claims was based on subprime mortgages, but presented as a failsafe investment.

“I deny categorically the SEC’s allegations,” Tourre said Tuesday at a hearing of a senate subcommittee in Washington. “I will defend myself in court against this false claim.”

He said the deal he worked on at Goldman “was not designed to fail.”

Six other current and former Goldman Sachs employees, including Lloyd Blankfein, the firm’s CEO, are testifying today about the bank’s mortgage-backed securities over the past few years.

In 2007, Goldman created and sold securities without telling investors that a hedge fund, Paulson and Co, helped pick the securities, and then bet against them. The SEC alleges that Tourre misled investors, and did not tell them that Paulson was buying credit protection.

But Tourre denies he misled anyone. He said he told the investors that “Paulson’s fund was expected to buy credit protection on some of the senior tranches.”
Tourre said he was being unfairly targeted.

“I have been the target of unfounded attacks on my character and motives,” he said.