Fabrice Tourre denies fraud allegations

20 July 2010

Goldman Sachs executive Fabrice Tourre has denied acting improperly in regard to the controversial Abacus collateralized debt obligation (CDO) product.

Last week, the bank agreed to pay out $550 million after the Securities and Exchange Commission (SEC) accused it of misleading investors by not informing them that hedge fund Paulson & Co - which helped create the CDO - was betting on its failure.

The SEC said it would continue its case against Mr Tourre, who is said to have helped design the product.

But lawyers acting on his behalf have asked for the civil fraud charges against him to be dropped, reports Reuters.

"The purported claims against Mr Tourre are based solely on alleged actions and omissions concerning information known to many different Goldman Sachs employees working in various aspects of its business," his legal team said.

Goldman Sachs has not admitted or denied the SEC's claims, but did state that it regrets that marketing materials for the CDO did not disclose Paulson's involvement.

By Gary Cooper

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