The top US securities regulator can pursue its high-profile civil fraud lawsuit against a Goldman Sachs Group Inc vice president over a product linked to subprime mortgages, a federal judge ruled. US District Judge Barbara Jones rejected the request by the executive, Fabrice Tourre, to dismiss US Securities and Exchange Commission claims accusing him of violating a federal law designed to stop the fraudulent sale of securities.
She dismissed some SEC claims, citing a recent US Supreme Court ruling limiting the reach of federal securities laws. The SEC sued Goldman and Tourre in April 2010, accusing them of failing to tell investors the Paulson & Co hedge fund, run by billionaire John Paulson, helped choose and bet against the subprime residential mortgage-backed securities underlying Abacus 2007-AC1, a collateralized debt obligation. Goldman settled with the SEC last July for $550 million without admitting wrongdoing, but remains the subject of many lawsuits by investors who say the Wall Street bank's actions and the resulting negative publicity depressed its share price.
Tourre is the only individual sued in the case. SEC spokesman John Nester said: "We are pleased with the court's ruling and look forward to presenting our fraud charges against Mr Tourre in court." Goldman spokesman David Wells declined to comment on the ruling. He said Tourre remains an employee, but is on leave.
Citing the June ruling by the US Supreme Court in Morrison v. National Australias Bank Ltd, Jones said the SEC could not pursue a fraud claim related to Germany's IKB Deutsche Industriebank AG, which the regulator said lost nearly its entire $150 million investment in Abacus.
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