Fabrice Tourre and Brian Stoker share a bond: The Securities and Exchange Commission accused both men of fraud.
Now, as Mr. Tourre’s civil trial opened this week a year after a jury cleared Mr. Stoker, they’re sharing a courtroom.
In an unlikely appearance at the federal courthouse in Lower Manhattan, Mr. Stoker joined the horde of spectators swarming the trial, lending moral support to Mr. Tourre. Mr. Stoker even paid Mr. Tourre a visit at the defense table, onlookers say, introducing himself during a break in the action.
It is unclear what the two discussed, though one might imagine a kinship forming over, say, a common distaste for the S.E.C. And while he is not advising Mr. Tourre in any formal way, Mr. Stoker could offer a pointer or two on how to beat a government case.
Until the S.E.C. charged Mr. Stoker and Mr. Tourre, they would have been rivals. Mr. Stoker was a midlevel Citigroup executive and Mr. Tourre was a trader at Goldman Sachs.
The S.E.C. cases linked them, however, as two of only a few employees at big Wall Street firms to land in court over the crisis.
The cases, arguably the most prominent actions stemming from the financial crisis, are alike. Both stem from accusations that they misled investors about toxic mortgage securities.
And in both cases, their banks settled the accusations. Goldman paid a $550 million penalty without admitting or denying guilt. Citigroup agreed to a $285 million fine, though a judge has balked at the settlement, calling it “pocket change.â€
In the case of Mr. Tourre, the S.E.C. contends that he and Goldman sold investors a synthetic collateralized debt obligation, a deal linked to the performance of mortgage-backed bonds, without disclosing the role a hedge fund played in creating the deal. The hedge fund, run by the billionaire John A. Paulson, was also betting against the deal. When it soured, Mr. Paulson reaped $1 billion at investors’ expense.
In turn, Mr. Tourre’s lawyers argue that synthetic C.D.O.’s. are structured such that someone needs to bet against the deals, a fact well known to the sophisticated investors who lost money. One investor bets the bonds will fail; another bets they will pay out. Goldman, the lawyers will argue, sought input from both sides when creating the deal.
In the opening arguments on Monday, Mr. Tourre’s lawyers also painted him as a scapegoat for a deal that was approved at higher rungs of Goldman.
That argument played well at Mr. Stoker’s trial. After finding him not liable, the foreman of the jury asked, “Why didn’t they go after the higher-ups rather than a fall guy?â€
