Former Goldman Sachs Group Inc. (GS.N) Vice President Fabrice Tourre lost a bid to narrow the U.S. Securities and Exchange Commission's fraud charges against him over the marketing and sale of a collateralized debt obligation.
U.S. District Judge Katherine Forrest on Tuesday rejected Tourre's argument that a 2010 U.S. Supreme Court decision limiting the reach of U.S. securities laws would require the SEC to narrow its case against him.
Forrest also ruled in favor of the SEC on portions of the case, including the sale of credit protection by a third party, ACA LLC, on $909 million of the collateralized debt obligation known as Abacus 2007-AC1 CDO.
The rulings come ahead of Tourre's upcoming trial, scheduled for July 15.
Attorneys and representatives for Tourre and the SEC did not immediately return requests for comment. Michael DuVally, a spokesman for Goldman, declined to comment.
The SEC sued Goldman and Tourre in 2010, accusing them of failing to tell investors that billionaire John Paulson's hedge fund Paulson & Co. had helped choose and bet against the subprime residential mortgage-backed securities comprising Abacus 2007-AC1.
"The SEC essentially argues that Tourre handed Little Red Riding Hood an invitation to grandmother's house while concealing the fact that it was written by the Big Bad Wolf," Forrest said of the case in her ruling on Tuesday.
The case is SEC v Goldman Sachs & Co et al, U.S. District Court, Southern District of New York, No. 10-03229.