Judge rejects appeal to dismiss Goldman employee’s fraud lawsuit

3 November 2010

An appeal by Goldman Sachs employee Fabrice Tourre for the fraud lawsuit against him to be thrown out of court has been rejected by a US judge.

The banker, an executive named in the civil action by the Securities and Exchange Commission (SEC), had made the appeal as he claimed that the transaction involving collaterized debt obligations did not occur in the US.

Barbara S Jones, a judge in the US who was quoted by Bloomberg, said: “Defendant Tourre’s motion for judgment on the pleadings is dismissed without prejudice and with leave to renew after plaintiff has filed its amended complain.”

Lawyers working on behalf of Mr Tourre had used the example of a ruling by the US Supreme Court in June of this year as justification for the rejection of the case.

The authorities ruled that fraud claims surrounding securities based outside the US made by overseas investors on foreign exchanges were not compatible with US legislation.

However, judge Jones said that because the case against Goldman Sachs and Mr Tourre was filed before June, the complaint can be changed.

Goldman Sachs and Mr Tourre were named in legal action by the SEC after the regulator claimed they had deliberately misled investors in relation to the Abacus 2007-AC1 investment opportunity.

By Jim Ottewill

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