Former Goldman Sachs trader Fabrice Tourre returns to Federal Court after a lunch break in New York. Tourre, a 34-year old Frenchman known as "Fabulous Fab," is charged with fraud in connection with mortgage bonds that lost investors some $1 billion when the market for "subprime" loans burst in 2008. (Stan Honda/AFP/Getty Images)

The Securities and Exchange Commission on Monday kicked off its high-profile court case against Fabrice Tourre, the Goldman Sachs trader known as “Fabulous Fab” who has come to symbolize Wall Street’s reckless behavior leading up to the economic meltdown.

A federal jury of five women and four men was picked Monday for the three-week trial in Manhattan to decide whether Tourre played a key role in defrauding investors by selling them a complex mortgage investment that was designed to fail, as the government alleges.

While Tourre risks losing his reputation and money, the SEC has much at stake too. The agency has negotiated many settlements but pursued few trials involving individuals allegedly linked to financial crisis misdeeds. Critics have accused it of shying away from court battles, and this trial offers the agency a chance to shed its risk-averse image.

The civil case also could be the SEC’s last big shot at holding Wall Street and its executives accountable for their role in sinking the global economy, legal experts said. The five-year statute of limitations is running out on misconduct tied to the 2008 meltdown, meaning there isn’t a big inventory of financial crisis cases left to choose from going forward.

“This could well be the last chance to put a face on the crisis,” said James Cox, a professor of corporate and securities law at Duke University.

Tourre showed up in court Monday wearing a black suit and orange patterned tie. During opening statements, the SEC portrayed him as the epitome of “Wall Street greed," while his attorneys described him as a scapegoat.

U.S. District Court Judge Katherine B. Forrest urged attorneys on both sides to refrain from using financial jargon, according to media reports.

Tourre, a French citizen and an engineer by training, allegedly devised and marketed the mortgage deal that prompted the SEC to sue him and Goldman Sachs in April 2010.

The SEC accused Tourre and Goldman of creating the mortgage product at the request of tycoon John Paulson and his hedge fund, which was looking for a way to bet on a drop in the housing market. But investors were not told that the hedge fund helped pick the securities that went into the product, known as a collateralized debt obligation, the agency said.

Paulson and his hedge fund were not accused of wrongdoing. But the SEC aggressively went after Goldman and Tourre, accusing them of defrauding investors by designing a portfolio to fail so that they and their client could bet against it and make a profit off its collapse.

The SEC said investors lost an estimated $1 billion, while the hedge fund made about $1 billion from the deal.

In one e-mail, Tourre wrote to his girlfriend at the time that he was the “only potential survivor, the fabulous Fab . . . standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstruosities!!! [sic]”

In July 2010, Goldman Sachs settled the case with the SEC for a record $550 million, though it did not admit any wrongdoing. But Tourre maintained his innocence, and Goldman Sachs is covering his legal costs as he presses on with his defense.

Tourre, now a doctoral student in economics at the University of Chicago, resigned from Goldman in December 2011 after being put on unpaid leave. In a statement, his attorneys said that he has done nothing wrong and that they are confident the jury will “soundly reject the SEC’s charges.”

Legal experts tracking the trial said that if the SEC can’t win its case, the failure would be an embarrassment for the agency and call into question the very premise of its original case against Goldman.

“If they lose, then it looks like the way they treated Goldman Sachs was not right,” said Adam Pritchard, a professor at the University of Michigan Law School. “If they win, it will be a vindication of the settlement with Goldman as well.”

John C. Coffee Jr., a professor at Columbia Law School, said the SEC is probably in a “damned if they do, damned if they don’t” situation, in part because Tourre was essentially a salesman and not a high-level Goldman executive.

“If it wins, people will say they only went after the office boy, even though there were lots of more high-level people involved with this portfolio,” Coffee said. “If it loses, it’s going to be humiliated.”

Eddy Palanzo contributed to this report.