In an opinion today, Judge Forrest denied the motion of former Goldman Sachs banker Fabrice Tourre for a new trial of SEC charges that he helped conceal from investors that a mortgage security was constructed, in part, by a hedge fund that was run by John Paulson and that was betting against the transaction.  She found there was sufficient evidence for the jury’s verdict:

Continue Reading Judge Forrest Denies Tourre’s Motion for New Trial

Yesterday, the SEC asked Judge Barbara Jones to reinstate certain securities fraud claims against Goldman Sachs trader Fabrice Tourre relating to the sale of CDO notes to IKB, a German financing bank. Judge Jones dismissed these claims last June because the transaction was not a “domestic securities transaction” under the Supreme Court’s 2010 decision in Morrison v. National Australia Bank Limited, 130 S. Ct. 2869 (2010). It fell outside Section 10(b) of the Exchange Act. The SEC asserts in its motion that a recent Second Circuit case adopted a “broader” definition of “domestic securities transaction” than Judge Jones and that under that broader definition, the sale is a “domestic securities transaction” subject to U.S. law. According to the SEC, in Absolute Activist Master Fund Limited v. Ficeto, 672 F.3d 143 (2d Cir. 2012), the Second Circuit held that a transfer of title to securities within the United States is sufficient to satisfy the “domestic securities transaction” test. The SEC claims that the closing of the CDO transaction took place in New York and that title to the notes also transferred in New York. Based on the alleged transfer of title within the U.S., the SEC contends that it should be allowed to pursue its fraud claims against Tourre arising from the sale of the notes.

Continue Reading SEC Moves to Reinstate Fraud Claims Against Goldman Trader Fabrice Tourre