A federal judge ordered former Goldman Sachs (GS) bond salesman Fabrice Tourre to forfeit a $175,000 bonus and pay a $650,000 fine for misleading investors in the run up to the 2008 financial crisis.
A jury in August found Tourre guilty of defrauding investors in one of the few cases in which a Wall Street executive faced a trial in connection with actions regulators said contributed to the economic meltdown.
Tourre was charged by the Securities and Exchange Commission with lying to investors
while marketing a complicated investment product called a collateralized debt obligation filled with shaky mortgage loans that Tourre knew would likely plunge in value.
U.S. District Judge Katherine Forrest ordered Tourre to turn over the $175,463 in bonus money and prohibited him from seeking reimbursement from Goldman Sachs for the $650,000 fine.
Specifically, the SEC claimed that in 2007 Tourre, then a 28-year-old vice president with Goldman, worked with hedge fund guru John Paulson to create an investment product called Abacus 2007 AC-1 loaded with mortgage-backed securities that both Tourre and Paulson expected to sour.
Tourre was accused of failing to reveal Paulson’s role and, moreover, not telling investors that Paulson was betting the securities would tank.
Tourre became notorious partly due to an email he sent to a former girlfriend in which he not only referred to himself as “Fabulous Fab” but also seemingly made light of his role creating investment products at Goldman that were bound to fail once the U.S. housing market collapsed.
Swiss bank UBS blames a rogue trader at its London office for a $2.3 billion loss that is Britain’s biggest-ever fraud at a bank. Kweku Adoboli, the 32 year old trader, is sentenced to seven years in prison. Britain’s financial regulator fines UBS after finding its internal controls were inadequate and allowed Adoboli, a relatively inexperienced trader, to make vast and risky bets.
The case has echoes of Societe Generale trader Jerome Kerviel, who hid €5 billion in losses. Kerviel said SocGen turned a blind eye to his colossal positions in late 2007 and early 2008 as long as they made money for the bank.
Wells Fargo Bank agrees to pay at least $175 million to settle U.S. Department of Justice accusations that it discriminated against qualified African-American and Hispanic borrowers from 2004 through 2009. The department said the bank’s discriminatory lending practices resulted in more than 34,000 African-American and Hispanic borrowers in 36 states and the District of Columbia paying higher rates for loans solely because of the color of their skin.
JPMorgan Chase announces a loss of $2 billion from a trade that was meant to protect the bank if the global economy sharply deteriorated. Later, losses from the bad trade swell to nearly $6 billion and shave much more from the company’s stock market value. The episode heightens concerns that the biggest banks still pose risks to the U.S. financial system, less than four years after the financial crisis.
Barclays agrees to pay more than $450 million to U.S. and British regulators to settle charges that it attempted to manipulate a global benchmark interest rate known as LIBOR. The rate indirectly affect the costs of hundreds of trillions of dollars in loans that people pay when they get loans to go to college, purchase a car or buy a house. Numerous other banks are under investigation for similar violations.
UBS pays $1.5 billion to settle LIBOR manipulation charges with regulators in the U.S., Britain and Switzerland. The bank says some of its employees tried to rig LIBOR in several currencies.
An independent review finds Kabul Bank spirited some $861 million out of war-torn Afghanistan in a massive fraud based on fake loans to 19 individuals and companies. A bailout of the bank costs the equivalent of 5 percent of Afghanistan’s gross domestic product, making it one of world’s largest banking failures ever.
HSBC, Europe’s largest bank, says it’s paying $1.9 billion in penalties to settle a U.S. money laundering probe. The investigation into HSBC focused on the transfer of billions of dollars on behalf of nations such as Iran and the transfer of money from Mexican drug cartels. The bank said its anti-laundering measures were inadequate and said it was “profoundly sorry.”