Several years after the start of the
financial crisis, and the mortgage meltdown that caused it, only one
individual, Fabrice Toure - a/k/a "Fabulous Fab," his self-imposed
moniker -- has been sued by the SEC for selling the mortgage backed
securities that created, or at the very least exacerbated, the crisis.
According to a recent piece in the New York Times,"SEC Case Stands Out Because It Stands Alone,"
Toure was an obscure trader for Goldman Sachs who was thrust into the
national spotlight in 2010 when the SEC sued him for his role in
creating and marketing Abacus, one of the many mortgage backed
securities created by Goldman during the irrational exuberance of the
early to mid 2000s. (Abacus is interesting in its own right because it
is one of the securities that was devised with the help of John Paulson,
the hedge fund manager who famously made billions shorting mortgage
backed securities like Abacus.) As the article notes, the question many
have raised is why Toure and why only Toure?
According to at least one former co-worker, Toure was a "junior" and
"insignificant" member of a larger team at Goldman responsible for
developing mortgage backed securities. In their response to the SEC,
Toure's lawyers emphasized this point, identifying all of the other
members of the team, and arguing that "singling Mr. Toure out for
criticism regarding the content of this clearly collaborative effort is
unreasonable." For its part, the SEC has not explained why it focused on
just one member of one team at one bank, and further on just one deal
created by that bank. However, as the article notes, recent increased
interest from other regulators, including New York's attorney general,
indicates that this may not be the case for long, and the banks may soon
be called upon to answer for their role in the crisis.
Finally, as interesting as Toure's story is, equally interesting is
the story behind how many of the documents that tell the story -
including Toure's non-public response to the SEC lawsuit - came to
light. The Times received them from an artist and filmmaker named Nancy
Cohen who found the materials on a laptop given to her by a friend in
2006. The friend told her that he found the laptop in a garbage can
downtown. Apparently, emails to Tourre continued "streaming into the
device." While Cohen ignored them for years, she began paying attention
when she learned about the SEC's lawsuit, and subsequently gave the
documents to the Times.
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