Jurors considering the fate of Fabrice Tourre sought clarity Thursday on two of the lesser charges facing the former Goldman Sachs Group Inc vice president.
On the second day of deliberations in a civil fraud trial brought by the Securities and Exchange Commission, jurors passed three notes to the federal judge in Manhattan presiding over the case.
Two notes concerned what jurors need to find to hold Tourre liable on two counts that require at least a showing of negligence for there to be liability.
Other counts facing Tourre have a higher standard requiring a finding he acted with intent to defraud or with reckless disregard for the truth.
The SEC accuses Tourre of failing to tell investors that the hedge fund of billionaire John Paulson selected mortgage securities linked to a 2007 investment vehicle called Abacus 2007-AC1 and planned to short - or bet against - the deal.
The SEC also contends that Tourre misled ACA Capital Holdings Inc, a company hired to select assets linked to Abacus, into thinking Paulson & Co Inc would invest in the equity of the synthetic collateralized debt obligation.
Tourre denies wrongdoing. Goldman, which had been a defendant when the lawsuit was filed in 2010, settled for $550 million without admitting or denying wrongdoing.
The two notes on the elements of the law for the so-called negligence claims stemmed from charges the SEC brought under the Securities Act of 1933.
In one of the notes, jurors asked whether either Tourre's base salary or the amount of money Goldman earned on Abacus satisfies a requirement that "money or property" be obtained to hold him liable.
Outside of the jurors' presence, Matthew Martens, a lawyer for the SEC, urged the judge to say either would work. Goldman Sachs earned $15 million in fees on Abacus, and Tourre said he earned $1.7 million in salary and bonus in 2007.
"We believe base salary should be enough on whether he received money or property," Martens said.
District Judge Katherine Forrest expressed skepticism that a base salary alone rather than Tourre's bonus tied to Goldman profits would satisfy the law.
When jurors returned, the judge referred them to instructions she gave Wednesday, in which she said it would be sufficient to find he obtained compensation directly or indirectly tied to a misstatement or omission.
She told jurors that any money Goldman earned on Abacus wouldn't suffice "unless it found its way down to Mr. Tourre in some way."
In another note also addressing a charge requiring a finding of at least negligence, jurors asked about the SEC's claim that Tourre engaged in the offer or sale of Abacus notes and in two credit default swaps.
"Do we need to find that he operated as a fraud or deceit for all three of those or is any one of them sufficient to find liability on this charge?" the note asked.
Forrest told jurors any one of those securities offers or sales would satisfy the charge.
The case is SEC v. Tourre, U.S. District Court, Southern District of New York, No. 10-03229.