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Fabrice Tourre's Response to the S.E.C.'s Complaint

Fabrice Tourre's Response to the S.E.C.'s Complaint

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Published by DealBook
Fabrice P. Tourre's response to the Securities and Exchange Commission's charges accusing him of securities fraud.
Fabrice P. Tourre's response to the Securities and Exchange Commission's charges accusing him of securities fraud.

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Published by: DealBook on Jul 19, 2010
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07/10/2013

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UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK -------------------------------xSECURITIES AND EXCHANGECOMMISSION,Plaintiff,v.GOLDMAN, SACHS & CO. andFABRICE TOURRE,Defendants.::::::::::DOCKETNO. 10-cv-3229 (BSJ)-------------------------------x
ANSWER OF DEFENDANTFABRICE TOURRE
Defendant Fabrice Tourre (“Mr. Tourre”), through his undersigned counsel, for his Answer to the Complaint dated April 16, 2010 (the “Complaint”) filed by Plaintiff theSecurities and Exchange Commission (the “Commission”), states as follows:1.Denies the allegations of paragraph 1, and specificallydenies that he made anymateriallymisleading statements or omissions or otherwise engaged in any actionable or wrongful conduct in connection with the synthetic collateralized debt obligation (“CDO”)transaction referred to as ABACUS 2007-AC1, except admits that the Commission purports to bring this action as described therein.2.Denies the allegations of paragraph 2, including specifically that thoseallegations completely and accurately characterize the offering materials for ABACUS 2007-AC1 or the credit default swaps (“CDS”) between Paulson & Co., Inc. (“Paulson”) andGoldman, Sachs & Co. (“Goldman Sachs”), and respectfully refers the Court to thosedocuments for a complete and accurate statement of their contents.
Case 1:10-cv-03229-BSJ Document 24 Filed 07/19/2010 Page 1 of 13
 
-2-3.Denies the allegations of paragraph 3.4.Denies the allegations of paragraph 4, except admits that Mr. Tourre was one of many Goldman Sachs employees who were involved in various aspects of the ABACUS 2007-AC1 transaction and were aware that Paulson was considering taking some or all of the shortside ofthe transaction, and respectfullyrefers the Court to the offering materialsfor ABACUS2007-AC1 for a complete and accurate statement of their contents, including the absence of anyinvestor in the equity tranche of the transaction.5.Denies the allegations of paragraph 5, except admits that ABACUS 2007-AC1closed on or about April26, 2007, and that Goldman Sachs initially recognized trading revenueofapproximately$15 million in connection with ABACUS 2007-AC1 and the CDS transactionswithPaulson.6.Denies the allegations of paragraph 6, except admits that the Commission purports to assert claims and seek relief described therein.7.Paragraph 7 purports to state legal conclusions as to which no response isrequired; to the extent (if any) that any further response is required, Mr. Tourre denies theallegations of paragraph 7.8.Admits the allegations of the first sentence of paragraph 8; denies that theallegations of the second sentence of paragraph 8 completely and accurately characterizeGoldman Sachs’ involvement in the ABACUS 2007-AC1 transaction and respectfully refers theCourtto the offering materials for the transactionfor a complete and accurate statement of their contents.9.Denies the allegations of the first sentence of paragraph 9, except admits that Mr.Tourre holds a Series 7 registration sponsored by Goldman Sachs, wasinvolved in various
Case 1:10-cv-03229-BSJ Document 24 Filed 07/19/2010 Page 2 of 13
 
-3-aspects of the ABACUS 2007-AC1 transaction, worked as a Vice President on the structured products correlation trading desk at Goldman Sachs in New York at various times during the2005-2008 period, and currently is an Executive Director ofGoldman Sachs International, based in London, England.10.Denies the allegations of paragraph 10 including that the allegations completelyand accurately reflect the contents of the document referenced therein, except admits theallegations of the first sentence of paragraph 10, and admits that Goldman Sachs participated invarious aspects of certain CDO transactions, including those that included the name ABACUS.11.Denies knowledge or information sufficient to form a belief as to the allegationsofthe first or second sentences of paragraph 11, except admits on information and belief thatPaulson is a hedge fund that established two funds known as the “Paulson Credit OpportunitiesFunds,” and that Paulson’s establishment of these funds and its strategy ofshorting thesubprime residential mortgage-backed security (“RMBS”) market were the subject of publicly-available reports prior to the closing of ABACUS 2007-AC1.12.Denies the allegations of paragraph 12, except admits that such allegations provide a very generaldescription of some RMBS and the other matters addressed therein, anddenies knowledge or information sufficient to form a belief as to the evolution of Paulson’s precise investment strategy.13.Denies the allegations of paragraph 13, except admits that those allegations provide a very general description of some CDOs.14.Denies knowledge or information sufficient to form a belief as to paragraph 14,except admits that Paulson’s investment strategy was the subject of publicly-available articles prior to the closingofABACUS 2007-AC1.
Case 1:10-cv-03229-BSJ Document 24 Filed 07/19/2010 Page 3 of 13

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