A U.S. judge on Wednesday ordered former Goldman Sachs Group Inc trader Fabrice Tourre to pay more than $825,000 after a jury found him liable for defrauding investors in a subprime mortgage product that failed during the financial crisis.
The decision by U.S. District Judge Katherine Forrest in Manhattan came in one of the prominent Wall Street cases linked to the crisis, and one of the few in which an individual was held personally responsible for wrongdoing.
Tourre was ordered to pay $650,000 in civil fines, and give up an additional $175,463 bonus plus interest linked to the transaction at the heart of the U.S. Securities and Exchange Commission case.
The total payout fell below the roughly $1.15 million, including a $910,000 fine, that the SEC had sought.
But the judge said a stiff sanction for the 35-year-old Frenchman was appropriate, saying Tourre's fraud lasted for several months and noting what investigators said were his false emails and misleading materials sent to investors.
"He has shown no remorse or contrition," Forrest added, referring to Tourre. The judge also forbade Goldman from paying Tourre's fine.
Goldman in July 2010 reached a related $550 million settlement with the SEC. It did not admit wrongdoing but acknowledged and expressed regret that its marketing materials were incomplete.
SEC enforcement chief Andrew Ceresney welcomed Wednesday's decision, including penalties he characterized as "significant."
"The ruling reflects the SEC's intent of pursuing meaningful sanctions to punish individuals responsible for misconduct and deter others from violating the federal securities laws," he said in a statement.
Tourre resigned from Goldman in December 2012, and is pursuing a doctorate in economics at the University of Chicago.
In a statement, he said he was "deeply grateful for the unwavering support of my family and friends as I consider potential next steps in the legal process."
Tourre became a symbol of the financial meltdown after the SEC sued him and Goldman in 2010 for misleading investors in a synthetic collateralized debt obligation, or CDO, linked to mortgages called Abacus 2007-AC1.
He became widely known as "Fabulous Fab" after using that nickname in an email cited in the SEC lawsuit.
The SEC accused Tourre of concealing from investors how Paulson & Co, the hedge fund of billionaire John Paulson, had helped put Abacus together and had bet it would fail.
It also accused Tourre of misleading ACA Capital Holdings Inc, which helped choose Abacus assets, into thinking Paulson would be an equity investor in the CDO, rather than bet the other way as part of a massive wager against subprime mortgages.
Paulson, meanwhile made about $1 billion by shorting Abacus, while investors lost the same amount, the SEC said.
"The fraud on ACA was critical to making the transaction work; without ACA as portfolio selection agent, Goldman would not have been able to convince others to invest in the equity of the transaction," Forrest wrote.
In August, a federal jury found Tourre liable on six of seven civil charges related to Abacus.
Tourre had been slated to teach an honors economics class this spring, but a University of Chicago spokesman on March 4 said those plans had been scrapped. No reason was given.
Tourre's lawyers had fought against any ban on Goldman reimbursing their client, saying it would be unprecedented, even as they said he had every intention of paying any penalty out of his own pocket.
The judge, however, said letting Goldman reimburse Tourre would send the wrong message to others mulling illegal conduct, though the defendant could seek reimbursement from others.
