Fabrice Tourre was so loyal to Goldman Sachs. Why wouldn't he have been? They had been good to him. After the subprime market tanked, his bosses had praised his creation of Abacus, a collection of crappy mortgage securities he had created so that hedge-funder John Paulson could short it, and cemented his status in the firm by giving him a promotion and a raise. So when the SEC sued Goldman for fraud over the deal, and certain embarrassing e-mails Fab had written about it came to light, he believed they would have his back, even after they put him on suspended leave. (It was only temporary! they told him. It didn't mean anything!) Was he nervous? Yes. But any fears he might have had were quelled when he traveled to Washington to testify with the rest of the gang in front of Congress. Sure, Fab had to endure some awkward questioning about his personal life. But the point was, he was there with his bros. Together. Forever. Blood brothers. Until now:
Goldman will cooperate in the proceeding against Fabrice Tourre, the employee who was also named in the S.E.C.’s lawsuit. [It's interesting that the settlement covers only Goldman, leaving Mr. Tourre -- one of several Goldman figures to testify before a Senate investigative committee -- out to dry.]
Update: A source tells the Journal Fab Fab will file a response to the SEC charges on Monday.
Live Coverage of S.E.C.’s Goldman Presser [DealBook/NYT]