Fabrice Tourre has been painted by the Securities and Exchange Commission as one of the great villains of the financial crisis, a smart Goldman trader who duped unsuspecting investors into buying toxic real estate securities he knew were doomed to fail.
At his trial Thursday, the jury saw another side of him as his legal team worked to rehabilitate his image.
“I am here to tell the truth and clear my name,†he said to his lawyer Pamela Chepiga after she asked him why he was sitting in a courtroom in Lower Manhattan.
Mr. Tourre then started describing the rags-to-riches story of his life, telling the jury he was born in a suburb just outside of Paris. His mother, now retired, gave pedicures. His father sells office furniture.
He dreamed of coming to the United States and succeeded in 1999 when he landed an internship in Hamilton, Ohio, as a production worker on an assembly line producing heater cores and air-conditioning units for a French company. He then attended Stanford, where he received a master’s degree in management science and engineering.
He testified that he had never heard of Goldman Sachs before arriving at Stanford, and decided to interview at the bank only to practice his English in job interviews. Instead he ended up taking a job at the big Wall Street firm. He is now accused of participating in a scheme while at the firm to defraud investors who bought into a trade in 2007 he helped structure.
Goldman was charged along with Mr. Tourre in 2010, but it chose to settle the charges. That left Mr. Tourre to battle the S.E.C. by himself, although the firm is paying his legal fees. The case is one of the few trials to emerge from the fallout of the financial crisis.
If the jury returns an unfavorable verdict in the civil trial, Mr. Tourre faces monetary penalties and a possible ban from the securities industry.
Ms. Chepiga’s questioning is aimed at undoing some of the damage inflicted this week by the S.E.C.’s lead lawyer, Matthew T. Martens. On Wednesday and Thursday, Mr. Martens told jurors that Mr. Tourre failed to disclose to investors in the trade that it was designed by the hedge fund Paulson & Company, which made more than $1 billion betting the transaction would fail. Mr. Martens has effectively used e-mails Mr. Tourre wrote to a girlfriend where Mr. Tourre joked about potentially toxic products he was selling, asking Mr. Tourre to read his words to the court. “Is that a smiley face or a wink?†Mr. Martens asked Mr. Tourre, drawing grins from some jurors.
“It was a silly, romantic e-mail I sent late at night during a period of market stress,†Mr. Tourre said. In another potentially damaging message to his girlfriend, he wrote “I love this website†and linked to a site that referred to exploding mortgages. He added during the reading of yet another e-mail, where he joked to his girlfriend that he sold toxic real estate bonds to “widows and orphans†that he deeply regretted writing it and that was “in poor taste.â€
How Mr. Tourre appears to the jury in this trial, which has been bogged down in financial jargon, will be critical. While jurors have nodded off during technical discussions of structured financial products, they seem engaged by the more human aspects of the case, be it Mr. Tourre’s love notes or his humble beginnings.
His thick French accent has been a bit of a stumbling block. The court reporter often asks him to repeat words, but he also comes across as sympathetic.
He looks much younger than his 34 years, and jurors heard he was just one of more than a thousand vice presidents at Goldman Sachs in 2007 when the trade in question was structured.
He did not have an office and could touch the people next to him if he stretched his arms. Still, cubicle life did not seem to stop him. He made $1.7 million in 2007, a nod to the business he was bringing in at Goldman, trading lucrative structured products.
Most of Thursday was dominated by Mr. Martens’s examination of Mr. Tourre, who tried to show the jury that Mr. Tourre repeatedly hid from investors Paulson & Company’s role in the transaction. Mr. Martens presented the jury with numerous exhibits that showed Mr. Tourre pitched the trade to a number of investors, none of whom were told of the hedge fund’s involvement in selecting the components of the trade.
Paulson & Company’s involvement in the security became a source of tension, as Mr. Tourre insisted repeatedly that another firm, ACA Management, selected the portfolio, and that is what was disclosed to investors.
Mr. Martens also tried to emphasize to the jury the role that Mr. Tourre had in writing the reams of information about the trade that went to investors. Mr. Martens suggested Mr. Tourre was the point person for what went out, while Mr. Tourre insisted repeatedly he was responsible only for what his team contributed. At one point, Mr. Martens suggested that Mr. Tourre’s testimony had contradicted previous testimony he had given to the S.E.C. and Congress, a statement that no doubt signaled to the jury the magnitude of this case.
Ms. Chepiga, the defense’s lead counsel, erupted at the suggestion the testimony was contradictory, and read at length from his previous testimony in which he stated he relied on many people to draft the documents, including lawyers. The presiding judge, Katherine Forrest, halted the trial and asked the jury to leave.
Mr. Tourre has not asserted a so-called advice of counsel defense, meaning he is not saying his actions were based on legal advice from his lawyers. As a result, introducing the idea he relied on lawyers is potentially problematic.
“You walked into a buzz saw,†the judge told the lawyers. On the break the jury asked about the exchange, and Judge Forrest explained to them that Mr. Tourre was not pursuing an advice of counsel defense.
Mr. Tourre’s testimony will continue on Friday.
