NEW YORK — A lawsuit by the Securities and Exchange Commission may have destroyed his career, as former Goldman Sachs trader Fabrice Tourre put it, but for more than a year it didn’t eliminate his pay.
Goldman Sachs Group paid Tourre a base salary of $738,000 after he was put on leave after the SEC filed suit in 2010, Tourre said Friday.
Tourre, 34, speaking at the end of his second week of his trial, said he didn’t have a choice but to go on leave. “I was hoping to go back to Goldman Sachs and in the meantime make the SEC understand this transaction,” Tourre said. Instead, he ended up on trial in federal court in New York on securities fraud charges.
The trial has become the highest-profile court proceeding to come out of the SEC’s investigations of the 2008 financial crisis and is a chance for the agency to hold an individual accountable for alleged wrongdoing on Wall Street.
The SEC contends that Tourre misled investors in a complex mortgage deal known as Abacus 2007-AC1. He allegedly failed to disclose to the investors that Paulson & Co., the hedge fund of billionaire John Paulson, helped select the securities that the deal depended on and was planning to bet against it.
The SEC also claims that Tourre misled ACA Capital Holdings, a company that Goldman hired to oversee the deal, into believing Paulson was investing in the deal rather than shorting it.
ACA later became an investor in Abacus and insured it. When the underlying mortgage securities turned toxic, the investors lost about $1 billion, while Paulson’s short positions made about the same amount.
Goldman Sachs, originally a co-defendant, agreed in July 2010 to pay $550 million to settle the lawsuit without admitting or denying wrongdoing.
Tourre, who denies wrongdoing, said Friday that he learned that the SEC was suing him when a headline scrolled across his screen while he was at work in April 2010 at Goldman Sachs’s London office.
Tourre told jurors Thursday that he earned $1.7 million in salary and bonus in 2007, the year of the Abacus deal.
His earnings in 2007 — particularly the extent to which his bonus was tied to profits he brought Goldman — may help the SEC show that he obtained money or property thanks to the alleged misrepresentations.
The reasons why SEC lawyer Matthew Martens chose to elicit how much Tourre earned on paid leave were less clear.
Stephen Crimmins, a former SEC lawyer at K&L Gates, said that although the pay isn’t unusual on Wall Street, for the average juror it might sound “odd.”
Tourre said the sum he earned on paid leave represented his base salary. Goldman spokesman Michael DuVally declined to confirm how much Tourre earned after being placed on paid leave in April 2010.
After the lawsuit was filed and he was subsequently called to testify before a Senate committee, Tourre said he “had to take a step back and figure out what to do with my life given that my nine-year career was destroyed.”
Tourre went on unpaid leave from November 2011 to the end of 2012 and is pursuing a doctorate in economics at the University of Chicago.