In 2010, the Securities and Exchange Commission accused Goldman Sachs and Tourre of misleading a handful of clients by not disclosing that a hedge fund helped select the bonds for an investment product and also bet that those assets would fall in value.
Goldman settled, but Tourre, who had been on unpaid leave from Goldman for some time and has not been working for the firm since the end of 2012, is still fighting the civil case.
The self-named 'Famous Fab' hit the headlines in 2010 when Goldman published some of the rather embarrassing email exchanges Tourre had with a couple of his girlfriends on the subject of CDOs and the mortgage market in general.
Here are some of the e-mails
1. 'Just made it to the country of your favourite clients (Belgians)!!! I have managed to sell a few Abacus bonds to widows and orphans that I ran into at the airport, apparently these Belgians love synthetic ABS CDO2!!!!'.
'Not feeling too guilty about this, the real purpose of my job is to make capital markets more efficient and ultimately provide the US consumer with more efficient ways to leverage and finance himself, so there is a humble, noble and ethical reason for my job.....amazing how good I am in convincing myself!!!'.
'Yup. work is still as laborious, it's bizarre I have the sensation of coming each day to work and re-living the same agony - a little like a bad dream that repeats itself....
In sum, I'm trading a product which a month ago was worth $100 and which today is only worth $93 and which on average is losing 25 cents a day.....That doesn't seem like a lot but when you take into account that we buy and sell these things that have nominal amounts that are worth billions, well it adds up to a lot of money.
When I think that I had some input into the creation of this product (which is by the way a product of pure intellectual masturbation, the type of thing which you invent telling yourself: 'well, what if we created a 'thing', which has no purpose, which is absolutely conceptual and highly theoretical and which nobody knows how to price ?') it sickens the heart to see it shut down in mid-flight......It's a little like Frankenstein turning against it's own inventor :)'.
'I will give you more details in person on what we spoke about, the summary of the US subprime business situation is that it is not brilliant.
According to (head of Goldman's subprime business Daniel) Sparks, that business is totally dead, and the poor little subprime borrowers will not last long!!
All this is giving me ideas for my medium term future, insomuch as I do not intend to wait for the complete explosion of the industry......'
4. 'I have 'to mentor' the others, in view of the fact that I am now considered a 'dinosaur'. In this business (at my firm the average longevity of an employee is about 2-3 years!!) people ask me about career advice. I feel like I'm losing my mind and I'm only 28!! Ok, I've decided two more years of work and I'm retiring'.
image: © C.P.Storm