Former Paulson & Co. executive Paolo Pellegrini leaves the Manhattan Federal Court in New York, July 17. Pellegrini is a witness in the SEC trial against Former Goldman Sachs bond trader Fabrice Tourre. (Brendan McDermid/Reuters)

The Securities and Exchange Commission clashed Wednesday with one of its own key witnesses when a former deputy to hedge-fund tycoon John Paulson accused the agency of badgering and trying to “trick” him in a deposition.

The heated exchange was a dramatic turn of events for the SEC as it tried to cope with an unwieldy witness in one of its highest-profile cases emanating from the 2008 financial crisis. The witness, wrapping up his second day of testimony, clearly angered the government’s lead attorney, who the day before asked the judge to declare him hostile.

The sparring marked a messy start to the trial of Fabrice Tourre, a former Goldman Sachs trader who allegedly defrauded investors by selling them a complex mortgage product that was designed to fail. Tourre and Goldman created the product at the request of Paulson’s hedge fund, which was looking for a way to bet on a drop in the housing market.

As it built its civil case in late 2008, the SEC questioned Paolo Pellegrini, the mastermind behind the hedge fund’s investment strategy, about his interactions with Tourre and others involved in the deal. A similar line of questioning on Wednesday yielded answers that the SEC’s lead attorney portrayed as inconsistent with past statements.

That’s when the showdown erupted.

Pellegrini said that he made those earlier statements “under pressure” from the SEC and that the agency’s line of questioning was “hostile” and “initimidating.”

“I thought you were trying to trick me in some way,” Pellegrini said. He added that in the 2008 statements singled out by the SEC, he was trying to convey the substance of a specific conversation without being specific about wording. He said he was worried that the SEC was “trying to nail me.”

“I was scared,” Pellegrini added.

At one point, the back-and-forth got heated enough that U.S. District Court Judge Katherine Forrest had to cut the witness off and begin questioning him herself.

The exchange became a focal point in the day’s testimony, and SEC attorney Matthew T. Martens did not hold back when the jury and Pellegrini were dismissed for a break.

Martens told the judge that Pellegrini’s assertions about the SEC were “utter nonsense” and “garbage.” He suggested that Pellegrini was changing his story because his former employer was facing another lawsuit, but the judge barred Martens from raising that issue in front of the jury.

The case against Tourre is a high-profile one for the SEC, in part because the agency has not taken many financial-crisis-era cases involving individuals to trial. Critics have accused the agency of shying away from court battles, and this trial offers the SEC a chance to shed that risk-averse perception.

A loss for the SEC would be especially devastating because the five-year statute of limitations is running out on the 2008 meltdown, meaning there isn’t a big inventory of financial-crisis-era cases left to choose from going forward.

The SEC had also charged Goldman Sachs in the case, but the investment bank settled in 2010 for a record $550 million. When the housing market tanked, the hedge fund made a profit of $1 billion, and investors lost about that much. On Wednesday, Pellegrini said he personally pocketed $20 million from that deal — before taxes, he added.

Tourre’s attorneys have said their client is nothing more than a low-level scapegoat. Tourre was only a 28-year-old associate at Goldman when he started working on the mortgage deal, an issue that his attorney, Pamela Chepiga, raised Wednesday.

Yet the SEC presented a series of e-mails to Pellegrini and others involved in the transaction in which Tourre was consistently the highest-level Goldman employee looped in on the exchanges, and each side parsed the meaning of those communications.

The SEC alleges that Tourre, who was in charge of marketing the deal to investors, failed to disclose to them that Pellegrini and others at his hedge fund played an influential role in picking the securities that went into the mortgage product.

In its lawsuit, the SEC says Tourre also played a key role in helping dupe ACA — a third-party firm hired to put the deal together and insure it. Tourre misled his main ACA contact, Laura Schwartz, into believing that the interests of the hedge fund and ACA were aligned when they were not, the SEC has said.

On Wednesday, Pellegrini repeatedly said he told Schwartz that his firm was betting against the housing market.

The SEC then cited earlier statements in which Pellegrini said he had no factual knowledge of such an exchange or that his memory of the conversations was key. And Tourre’s attorneys singled out other earlier statements that were consistent with what Pellegrini said Wednesday.

Tourre’s attorneys also brought into evidence several articles in widely circulated daily newspapers that reported on Paulson’s investment strategy and its bet against mortgages in housing markets, suggesting that the strategy was no big secret.

Many members of the nine-person jury weren’t even looking at the e-mails flashed on the screen before them, and the judge took note. Once, after the jury filed out for a break, she said she’d considered handing out popcorn to keep them engaged.

“We are losing some of the jurors here, who are trying valiantly to both follow and stay awake,” Forrest told the attorneys, urging them to lose the jargon and keep the trial moving.