Goldman to pay Tourre's legal fees after its own $550m fine

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The Independent Online

Goldman Sachs will pay the remaining legal costs of Fabrice Tourre, the trader at the centre of the Securities and Exchange Commission's (SEC) $1bn (£650m) fraud investigation, despite settling its own role out-of-court.

The Wall Street bank paid a record $550m fine to the SEC on Thursday following charges that the bank and its employee, Mr Tourre, misled investors.

Mr Tourre was the brain behind Abacus 2007-AC1, a package of sub-prime mortgages in which institutions like Royal Bank of Scotland (RBS) made substantial losses, and the SEC is pursuing its case against him.

Goldman did not admit liability, but did agree to tighten controls. It is alleged that Mr Tourre failed to inform investors that Paulson & Co was involved in setting up Abacus, important because the hedge fund would only make money if the scheme performed poorly. Although Mr Tourre is on indefinite leave and has been embarrassed by a series of leaked emails in which he calls himself "fabulous Fab", the bank has stood by the trader.

The settlement should have provided cheer for Goldman's second quarter results on Tuesday, but they will be overshadowed by suggestions that RBS could still sue for $740m.