WSJ reporter Justin Baer describes his interview with former Goldman Sachs trader Fabrice Tourre, ahead of his conviction by a federal jury for misleading investors in a mortgage-linked deal. (Photo: AP)
At the end of each day of his three-week trial, Fabrice Tourre shuffled through a downtown Manhattan courthouse's revolving doors onto Worth Street, past photographers and into a nearby building where his legal team had set up temporary offices.
Now, the former Goldman Sachs Group Inc. trader would like nothing more than to slip away, undetected, into Wall Street history.
Yet three years after the government accused Mr. Tourre and his former employer of misleading investors, the 34-year-old Frenchman concedes he will never shake a public identity forged by the trial and a cache of personal emails that surfaced during the inquiry.
"I'm not naive," he said. "It's going to stay with me forever."
On Thursday, a federal jury found Mr. Tourre liable on six of seven claims that he violated federal securities law. The panel of nine jurors reached their verdict during the second day of deliberations.
In recent interviews before the verdict, Mr. Tourre told The Wall Street Journal he was resigned to a legacy as the face of Wall Street's mortgage machine run amok. Yet he said he was excited to return to his new life among the gothic buildings of the University of Chicago, where he is working toward a doctorate in economics.
Sitting in his lawyer's conference room, Mr. Tourre was as he often appeared on the witness stand last week: upbeat and unyielding in his defense of the actions at the heart of the Securities and Exchange Commission's civil complaint. His responses, like many of the emails that surfaced as exhibits in his trial, at times brim with optimism and self-awareness.
"I know the point of view of many people in the world is that I'll probably look like a bad guy," he said. "You cannot erase Google searches. You will forever get the same articles, forever get the fabulous Fab."
The nickname, bestowed by a Goldman colleague and referred to by Mr. Tourre himself in an email to his girlfriend, helped define him to many as an unsympathetic figure at one of Wall Street's most powerful firms.
The SEC said Goldman and Mr. Tourre misled investors on a mortgage deal that soured during the financial crisis, costing investors $1 billion. Mr. Tourre's lawyers had rejected those claims, calling Mr. Tourre a "scapegoat," a junior Goldman employee who rarely acted alone.
"I was a big team player," Mr. Tourre said. "If there was something wrong with this transaction, wouldn't people have told me?"
Wall Street was never an obvious destination for Mr. Tourre, who grew up in Châtenay-Malabry, a middle-class suburb of Paris. His father sold office furniture, while his mother worked as a pedicurist.
"It's an accident that I ended up in the financial industry," he said.
When he came to the U.S. in 1999 for an internship at the Hamilton, Ohio, factory of Valeo SA, a French auto-parts manufacturer, Mr. Tourre said, his co-workers called him "Febreze," and quizzed him on his parents' decision to name him after a "detergent brand."
After picking up a graduate degree at Stanford University on scholarship, Mr. Tourre decided to interview with some of the banks that had come to Stanford to recruit, including Goldman. His interview "went OK, I guess," Mr. Tourre said.
Mr. Tourre began at the firm in 2001, was promoted to associate in 2004 and, in December 2006, rose to vice president, a midlevel title shared by thousands at the firm. Even so, in 2007, when he helped create Abacus, the collateralized-debt obligation at the center of his SEC trial, Mr. Tourre was 28 years old and earning $1.7 million in total compensation. Later that year, he transferred to London.
Sensing the market for complex securities like CDOs was dying, Mr. Tourre began in late 2008 to reach out to friends about working at hedge funds and other investment firms. At his trial, the SEC showed the jury an email he had sent to Paolo Pellegrini, the former Paulson & Co. executive called as a witness for the government, indicating Mr. Tourre was surveying his prospects elsewhere.
"It wasn't a pleasant time to be working on a trading business where the direction from senior management was 'this business is going nowhere, let's shut it down,'" he said.
Then came a call from an in-house Goldman lawyer. The attorney told Mr. Tourre the SEC wanted to speak to him about a deal he had helped structure two years earlier, he said. He said he met with the agency's investigators on March 3, 2009.
The SEC had warned Goldman that year that it might be charged with violating securities laws in connection with the Abacus deal. Mr. Tourre said he didn't hear from the SEC again until that September, when the regulator sent him a so-called Wells notice informing him he might also be charged. He hired his own lawyer, Pamela Chepiga, from a list provided by Goldman and the firm's outside law firm. Goldman picked up the tab.
Mr. Tourre said he was sitting at his trading desk in London at about 4 p.m. on April 16, 2010, when a friend sent him a news story reporting that the SEC had filed a complaint against him and Goldman. "It was a shock," he said.
Although he said no one from the firm ever told him so, Mr. Tourre said he knew he was probably finished. Goldman released a series of Mr. Tourre's emails to the public just before he was scheduled to testify before a U.S. Senate subcommittee.
"They took certain steps that immediately didn't make me look good," he said. "But did I understand why they took those steps? Of course I did."
A person familiar with the matter said Goldman released the emails to get ahead of any effort by other parties to cherry-pick a handful of notes most damaging to the firm's defense.
Soon the world would know Mr. Tourre as fabulous Fab, a moniker he said was coined by Mitch Resnick, a Goldman colleague. A person familiar with the matter said Mr. Resnick, who worked in London, would frequently call the trading desk in New York asking: "Is Fabulous there?"
The name surfaced in an email he wrote to Marine Serres, another colleague at Goldman's London office and Mr. Tourre's girlfriend until 2011.
The email did more than embarrass him. The SEC had seized on that note and others as evidence he knew the mortgage market was collapsing even as he sold complex securities to investors destined to lose money.
Three months later, Goldman settled its SEC suit, agreeing to pay $550 million. The agency offered Mr. Tourre a deal consisting of a fine, a lifetime ban from the industry—with the right to reapply in two years—and an acknowledgment that he would neither admit nor deny wrongdoing. It gave him 24 hours to accept, he said. After consulting with his lawyers, Mr. Tourre said, he rejected the offer.
His legal travails took a bizarre turn in 2011 when his laptop, which he thought was broken when he tossed it in the garbage at his New York apartment on 10th Street and University Place several years earlier, reappeared—along with a still-streaming Gmail account—in a newspaper article that detailed still-more personal emails.
Mr. Tourre said he was in Rwanda, volunteering at a nonprofit that advised local coffee farmers, when he learned that his private notes to friends and family members were laid bare. "It is what it is," he said.
In September, Mr. Tourre is scheduled to go back to the University of Chicago to teach macroeconomics to fellow doctoral candidates. His research interests, including the relationships between markets and economics, and systemic risks in the financial system, make a clean break from his old life all but impossible. Mr. Tourre says he is OK with that.
"I want to finish my Ph.D.," he had said before the jury's verdict Thursday. "I started something and I want to finish it."
