October 17, 2011   88 notes

Goldman’s Tourre denied partial appeal in SEC case


By Grant McCoolNEW YORK, Oct 17 (Reuters) - The Goldman Sachs employee charged over the Abacus subprime mortgage transaction was denied permission on Monday to immediately appeal one of the legal claims that U.S. securities regulators brought against him.U.S. District Judge Barbara Jones rejected the request by Goldman vice president Fabrice Tourre, saying “it is a basic tenet of federal law to delay appellate review until a final judgment has been entered.”Last June, Jones upheld the U.S. Securities and Exchange Commission’s claim about offers of the product that it accused Tourre of making to German bank IKB Deutsche Industriebank AG and Dutch bank ABN Amro Holdings NV.Tourre has denied the charges. He is on leave from Goldman, which settled its part of the litigation for $550 million in July 2010 without admitting wrongdoing.Lawyers for Tourre had asked Jones on Sept. 22 for permission to make what is known as an interlocutory appeal on the part of the case related to offers to the European banks.They argued that an opportunity to appeal would have eliminated the need for extensive document review and litigation in several foreign courts.Both sides are gathering information and taking depositions, a process expected to take up to six more months. A tentative trial date has not yet been scheduled.Jones on Monday left open the possibility for an interlocutory appeal once the case is more fully developed.Tourre’s lawyer, Pamela Chepiga, declined to comment on the order. A spokesman for the SEC also declined to comment.The SEC sued Goldman and Tourre in April 2010, accusing them of failing to tell investors the Paulson & Co hedge fund, run by billionaire John Paulson, had helped to choose and bet against the subprime residential mortgage-backed securities underlying Abacus 2007-AC1, a collateralized debt obligation.In her June decision, Jones cited a ruling by the U.S. Supreme Court in Morrison v. National Australia Bank Ltd that limited U.S. litigation over foreign securities transactions.She said the SEC could not pursue a fraud claim related to IKBG, which the regulator said lost nearly its entire $150 million investment in Abacus. She also threw out a fraud claim related to ABN Amro, later part of Royal Bank of Scotland Group Plc , which assumed some credit risk from Abacus.The case is SEC v Goldman Sachs & Co et al, U.S. District Court for the Southern District of New York, No. 10-03229.

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