Stealing from "Widows and Orphans"
By Dennis Loo (8/2/13)
In their first real conviction of anyone involved in Wall Street ‘s toxic mortgages scandal that brought the U.S. economy and the rest of the world’s capitalist economies to the edge of disaster - saved only by the Brobdignagian $13 Trillion bailout (greatly exceeding the officially declared $787 Billion bailout) – one middle-level former Goldman Sachs trader, Fabrice Tourre, was found guilty yesterday of six counts of civil securities fraud. A handful of others, none of them high-level executives, were settled out of court prior to Tourre’s conviction.
The SEC, under fire for being asleep at the wheel, put its top people on this case.
Reports The New York Times in today’s issue:
“There is no denying the importance of this to the S.E.C. because it is a financial crisis case,” said Stephen J. Crimmins, a partner at the law firm K&L Gates and former deputy chief litigation counsel in the S.E.C. enforcement division, who was not involved in this case.
Yet even with the triumph over Mr. Tourre, the S.E.C. could still face scrutiny.
Some critics have questioned why the agency chose to make Mr. Tourre — a midlevel employee who was stationed in the bowels of Goldman’s mortgage machine — the face of the crisis. Rather than aim at a high-flying executive, the agency pursued someone barely known on Wall Street.
Those concerns also arose in another S.E.C. crisis-era case, in which a jury cleared a midlevel Citigroup employee, questioning why the agency had declined to charge more senior executives. Even Ms. Rhett, the juror, after reflecting on Mr. Tourre’s case, said, “I could characterize him as somewhat of a scapegoat.”
“There are bigger fish out there swimming fat and free, and they made a lot more money from the mess than Tourre ever dreamed of making,” said Erik Gordon, a professor of law and of business at the University of Michigan.
Such a waste of resources: your top people in charge of going after a really small fish. But then, big fish have big friends...
One of the pieces of evidence against Tourre was an email to his girlfriend in which he “joked about selling toxic real estate bonds to ‘widows and orphans.’”
As he was leaving the courthouse, Tourre was seen carrying a copy of Edward Gibbon’s classic The History of the Decline and Fall of the Roman Empire. An interesting choice of reading materials.
For his part, Tourre seemed upbeat and detached from the verdict.
What does a high-level Wall Street insider have to do to get a real punishment? Turn whistleblower? Reveal war crimes?