Goldman trader trial could put back firm's purple PR patch

Red Faced Blankfein

When Fabrice Tourre steps into a lower Manhattan courtroom on Monday, all of Goldman Sachs’s finely crafted public relations work of the past few months could count for little.

The Financial Times reports that the case – brought by the Securities and Exchange Commission against the former Goldman employee over allegations of client 'deception' – will serve as a reminder of the bank’s aggressive brand of dealmaking in the run-up to the financial crisis; and it comes as Goldman is working to present a softer image to the public.

Tourre, who infamously referred to himself in an email exchange as 'fabulous Fab . . . standing in the middle of (a system that) is about to collapse', was a key figure in the firm’s Abacus transaction. Abacus has come to be seen as a touchstone for the kind of double-dealing that critics have accused Goldman in particular of engaging in.

The bank structured Abacus, a portfolio of mortgage-related assets, and sold it to investors but did not clearly disclose that a hedge fund, run by billionaire John Paulson, was planning to bet against the deal and helped pick the bond’s underlying securities.

Hit the link below to access the complete Financial Times article:

Finance: Upsetting the narrative (subscriber content)

Goldman Sachs: trials and tribulations (subscriber content)

Tourre set for his day in court in high-stakes case for SEC (subscriber content)

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