Fabrice Tourre is a Vice President for the investment banking and securities firm Goldman Sachs. On April 16, 2010, Tourre was charged by the US Securities and Exchange Commission (SEC) with securities fraud. The charges relate to a series of e-mails sent by Tourre in 2007 in which he warned of the forthcoming subprime mortgage crisis and the potential "collapse" of Goldman Sachs.http://www.huffingtonpost.com/2010/04/16/fabrice-tourre-goldman-sa_n_540430.html

The charges amount to a civil lawsuit against Tourre and Goldman Sachs. The Justice Department declined to issue a criminal complaint in the matter.http://www.businessinsider.com/henry-blodget-fraud-fallout-fabrice-tourre-is-toast-goldman-will-be-fine-2010-4

Tourre, a French citizen who had graduated from Stanford University, started working for Goldman Sachs in 2001. He is considered an integral figure in the development of so-called "Abacus deals," elaborate and exotic investments that worked essentially like placing bets on mortgages and loans. When a borrower defaulted on a loan, and insurance then paid out, the holders of Abacus deals would theoretically earn big returns. According to The New York Times, Tourre and other figures at Goldman Sachs may have attempted to mislead investors about the loans at the heart of the Abacus deals, to make the assets seem more promising.http://www.nytimes.com/2009/12/24/business/24trading.html?_r=1&pagewanted=2 Then, they would profit when the borrowers defaulted and the investors lost their money.

The issue at the heart of the government's case against Goldman Sachs and Tourre stems from conflicts of interest. The allegations concern subprime mortgage securities which were sold to investors by Goldman Sachs, while the company was betting against these same subprime mortgages behind the scenes. So, in essence, the company was allegedly encouraging its clients to invest in subprime mortgage securities while simultaneously ensuring that these mortgages would default, and would profit by placing bets on these defaults in advance. The SEC estimates that these activities cost Goldman Sachs investors in excess of $1 billion.http://www.huffingtonpost.com/2010/04/16/sec-goldman-sachs-charged_n_540377.html

Goldman Sachs responded in a statement, saying the SEC's case has no foundation in the law. The New York Times noted that this is the first time the SEC has gone after a Wall Street deal that allowed investors to profit from the collapse of the housing market.http://www.huffingtonpost.com/2010/04/16/sec-goldman-sachs-charged_n_540377.html

It is important to note that the SEC's case against Tourre and Goldman Sachs is not a criminal charge, but a civil lawsuit, so there is no chance of jail time.http://www.businessinsider.com/henry-blodget-fraud-fallout-fabrice-tourre-is-toast-goldman-will-be-fine-2010-4 The fact that the Justice Department did not file criminal charges simultaneous with the SEC charges could indicate that some representatives there felt the case against Tourre was not strong enough.http://www.businessinsider.com/henry-blodget-fraud-fallout-fabrice-tourre-is-toast-goldman-will-be-fine-2010-4

Likely results could include Goldman Sachs paying fines up to hundreds of millions of dollars and Tourre being dismissed from the firm.http://www.businessinsider.com/henry-blodget-fraud-fallout-fabrice-tourre-is-toast-goldman-will-be-fine-2010-4