Fabrice Tourre, the former Goldman Sachs trader, was either a greedy scheming liar or a bright young executive just trying to do his job, according to dueling portraits presented during closing arguments Tuesday in the most prominent case from the financial crisis to go to trial.
These competing views of Mr. Tourre, who is accused of scheming with a big hedge fund to defraud investors in connection with a 2007 trade, were the last attempt by lawyers for the Securities and Exchange Commission and Mr. Tourre to influence the nine-member jury, which includes a school principal, a retired special education teacher and a former stockbroker.
Matthew Martens, the S.E.C.’s lead lawyer, was the first to present his closing remarks and had the last word with jurors in a rebuttal. Mr. Martens, who at times during the trial has appeared a bit rigid, hit his stride Tuesday, speaking clearly and forcefully from a lectern for more than three hours.
“When it came to lies from the witness stand, Mr. Tourre took the cake,” he told jurors. He said Mr. Tourre conspired with the hedge fund Paulson & Company to commit a $1 billion fraud to “feed Wall Street greed,” and he asked the jury to hold Mr. Tourre “accountable for his actions.”
Mr. Tourre, a 34-year-old Frenchman, was living in a “Goldman Sachs land of make believe” where deceiving investors is not fraudulent, Mr. Martens said.
Sean Coffey, a lawyer for Mr. Tourre, accused the S.E.C. of peddling “half truths” and “deceit” against his client. Unlike Mr. Martens, Mr. Coffey did not stand in one place during his closing, opting instead to pace in front of the jury, often ad-libbing. He picked up steam during his remarks and at one point appeared to be holding back tears.
“The idea that Fabrice Tourre, a 28-year-old vice president, was conjuring up a $1 billion fraud, or conspiring with others, is just not supported by the evidence,” he said.
Jurors have been listening to testimony for 12 days, and on Wednesday the presiding judge, Katherine B. Forrest of Federal District Court in Lower Manhattan, will give them instructions.
Mr. Tourre faces seven fraud-related charges, and the jury can find him liable on some or all of them. To find him liable, the jury has to find that Mr. Tourre made a material or important misstatement and did not correct it. The S.E.C. does not need to prove intent for all of the charges. Jurors can find Mr. Tourre did not intend to deceive investors but was reckless or negligent, and that could bring lesser penalties. If the jury returns an unfavorable verdict, Mr. Tourre faces fines and a possible ban from the securities industry.
Much of the closing arguments centered on a Jan. 10, 2007, e-mail that Mr. Tourre sent to Laura Schwartz, an executive at a financial firm that Goldman hoped would manage and invest in a mortgage-related security. He suggested both that a portion of the security usually held by a bullish investor had been spoken for, when that was not the case, and that Paulson & Company was a “transaction sponsor,” which some could have interpreted wrongly as the hedge fund betting that the investment would succeed.
Mr. Tourre admitted the e-mail was not accurate, and the S.E.C. contended that Mr. Tourre never corrected that misimpression despite several statements by Ms. Schwartz that referred to Paulson & Company as an “equity,” or long, investor. Mr. Martens alluded to testimony by both Ms. Schwartz and her former boss that their firm would never have participated if they had known the hedge fund was betting against the deal.
But Mr. Coffey fought back, arguing that his client had corrected the misimpression with multiple offering documents and noting that an executive at Paulson & Company testified that he had in fact told Ms. Schwartz of his employer’s plans to bet against the security.
Mr. Coffey also contended that Ms. Schwartz regularly dealt with hedge funds interested in strategies similar to the one Paulson & Company was pursuing. He scoffed at Ms. Schwartz’s claim that she had no sense of the fund’s strategy despite numerous news articles about its mortgage bets.
Mr. Martens pointed out that not all investors in the deal were aware of the hedge fund’s involvement or intentions, particularly IKB, a German bank involved. But Mr. Coffey noted testimony from a former colleague of his client who said such information would have been immaterial, given the nature of the deal.
Both sides also sought to poke holes in the credibility of opposing witnesses. Mr. Martens repeatedly doubted Mr. Tourre’s sudden recollection on the stand of why he described the first meeting between Ms. Schwartz and Paulson as “surreal” six years after the fact. Mr. Coffey countered that it is not uncommon for people to remember things with the help of related documents, which is what Mr. Tourre did in this instance. But Mr. Coffey questioned Ms. Schwartz’s credibility, pointing out that her testimony coincided with the S.E.C.’s dropping a separate investigation into her.
The trial has taken its toll on all sides. While riding the elevator down with Mr. Tourre after his closing remarks, Mr. Coffey announced, “I need a Scotch, and I am going to have one.”