Tourre/Goldman Sachs Face New York Securities Fraud Case with More Questions than Answers

The New York securities fraud case against Fabrice Tourre stands out for a number of reasons — not the least of which is because he is the only person charged with connection with the sale of mortgage-backed securities, which were instrumental in the nation’s economic collapse. Now, evidence apparently found on a trashed laptop raises all kinds of legal and ethical issues.

As HuffPost Tech reports, it’s a cautionary tale that data never dies. To say nothing of the fact that the case creates a poster child for the worst way of disposing of old computers with sensitive information.
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But a New York Securities Lawyer would be quick to note that there is a big difference between what might be found in the trash — or published in the newspaper — and what makes it into a court of law. In this case, the computer was found in the trash and was still importing e-mails between Tourre and his attorney, as they discussed how to handle the criminal and civil accusations surrounding him. Such communications would also be protected under attorney-client privilege.

Editor and Publisher reports the New York Times has denied hacking Tourre’s e-mail account.

The saga of the former Goldman Sach’s trader also illustrates how a criminal investigation can focus on one or two employees — often unfairly — and why each should seek experienced legal advice as early as possible in such cases. As the New York Times reports, hundreds of employees worked in teams to devise and sell the securities, which were examined by lawyers and approved by management. The buyers included hedge funds, banks and insurance companies.

In this case, the 28-year-old trader was little known — even inside the firm. And yet he has the dubious distinction of being the only person on Wall Street sued by the Securities and Exchange Commission in connection with the sale of mortgage-backed securities.

Naturally, it raises questions about the diligence of government investigators. As former New York attorney general G. Oliver Koppell put it, “it’s impossible that only one person was involved with fraudulent activities in connection to the sales of these mortgage securities.”

From a defense standpoint, it should be noted that the pressure on regulators has led the U.S. Attorney General’s Office to announce it was widening the probe — years after the fact now. Such politically motivated investigations often lead to questionable charges that can ruin reputations regardless of how weak the case.

Tourre received a Wells notice in the fall of 2009 — a notice from the SEC that he was likely to be named in a civil fraud lawsuit for his role in the mortgage deals. His lawyers have quietly argued that singling him out is unreasonable. Those arguments were non-public but were among the materials given to the Times by a New York artist. The woman said she found the information on a laptop given to her by a friend in 2006.

The friend claims the laptop was in the trash.

Malecki Law handles all types of Security law matters, including fraud allegations, audits and investigations and whistleblower cases. Call 212-943-1233.