Fabulous Fab's love letters to Goldman Sachs
UPDATED at 9:19 a.m. WITH TOURRE'S TESTIMONY TO BE DELIVERED TODAY:
As readers of this blog know, I have developed a fascination with the self-described "fabulous" Fabrice Tourre, the 31-year-old Goldman Sachs executive at the heart of the SEC's fraud charge against the powerhouse Wall Street firm.
Tourre designed the exotic financial instrument -- a synthetic collateralized debt obligation call "Abacus," or AC-1 -- that hedge fund manager John Paulson used to short the housing market. ACA, an investor in Abacus, helped picked the portfolio's investments. IKB, a large German bank, was an investor in Abacus.
Over the weekend, Goldman released several of Tourre's e-mails from 2007 to his girlfriend, in which he talks about his role in the transaction and his feelings about it. The e-mails are a curious mix of tender affections and high finance. For instance:
"When I think that I had some input into the creation of this product ... it sickens the heart to see it shot down in mid-flight. It's a little like Frankenstein turning against his own inventor. ;) ... I believe that a soft and sensual feminine intervention is necessary for Fab's survival."
In testimony Tourre plans to deliver today before the Senate Permanent Investigations committee, along with Goldman chief executive Lloyd Blankfein, he says: "I deny -- categorically -- the SEC’s allegation. And I will defend myself in court against this false claim."
Here are some other excerpts of Tourre's testimony:
"Goldman Sachs also had no economic motive to design the AC-1 transaction to fail. Quite the contrary, we held long exposure in the transaction just like ACA and IKB. When the securities referenced in AC-1 declined in value, we lost money too. Goldman Sachs’ overall losses in connection with the transaction exceeded $100 million, including $83 million with respect to the retained long position."
Tourre's testimony concludes:
"Mr. Chairman, the last week has been challenging for me and my family, as I have been the target of unfounded attacks on my character and motives...I wish to repeat -- I did not mislead IKB or ACA, two of the most sophisticated institutional investors in these products anywhere in the world."
Follow me on Twitter at @theticker
April 27, 2010; 9:19 AM ET
Categories: Congress , Corporations , The Ticker | Tags: Business, Collateralized debt obligation, Fabrice Tourre, Goldman Sachs, Hedge fund, John Paulson, SEC, Wall Street, video
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