(CN) - A former Goldman Sachs executive was properly nailed for his role in a failed mortgage deal that cost investors $1 billion without proof that he received a "fraud bonus," a federal judge ruled.
In a major win for the Securities and Exchange Commission in August, a federal jury found that Fabrice Tourre, 34, committed
six of seven fraud violations related to misleading investors in a deal known as Abacus 2007-AC1.
Jurors found that Tourre had failed to disclose that hedge fund billionaire John Paulson was betting against the mortgage securities that he helped select.
The deal earned Paulson billions, and cost investors the same.
Tourre left Goldman in 2012. Goldman settled with the SEC for $550 million in July 2010 without admitting or denying any wrongdoing.
Lawyers for Tourre sought to overturn the jury's decision by arguing that there was no proof that he received money or property through a false statement. Tourre did, however, collect a base salary and a bonus.
U.S. District Judge Katherine Forrest said Tuesday that it was "simply wrong" to believe the SEC could not win its case without showing that Tourre's payments were explicitly earmarked for the fraud.
The statute "does not require the SEC to show that a banker like Tourre received some sort of additional 'fraud bonus' on top of his base salary in order to establish liability; as the statute clearly states, the SEC must prove that Tourre obtained money or property by means of a material misstatement or omission," according to the ruling.
An attorney for Tourre did not immediately respond to a request for comment.