Is the Goldman Settlement a Lesson for Young Wall Street?
Just as the SEC used the case against Goldman as a lesson to big banks, could the ongoing case against controversial trader Fabrice Tourre be a lesson for young Wall Street?
The long-awaited settlement between Goldman Sachs and the SEC came to fruition late Thursday—just hours after Congress passed financial reform—with the bank agreeing to pay a $550 million fine and to offer investors more disclosure when marketing mortgage securities. The settlement still has to be approved by a New York judge, but one name is noticeably absent from the agreement: that of Fabrice Tourre.
Tourre is the controversial 30-something who assembled the Abacus deal that landed Goldman in this particular spot. He's idolized by young Wall Street for creating such a lucrative deal for his client, and he gave a memorable turn before the Senate Permanent Subcommittee on Investigations, during which he said that the SEC's charges were "false claims."
Now Tourre's on his own to fight the SEC, since he was named as codefendant on the original suit. A Goldman Sachs spokesman says Tourre remains an employee on administrative leave and that the bank continues to pay his legal expenses. Tourre could not be reached for comment.
But just as the SEC used the case against Goldman as a lesson to big banks, could the ongoing case against Tourre be a lesson for young Wall Street? It's hard to say. The lure of Wall Street remains a strong one. Its paydays are potentially huge, and it's one of the few places hiring in an otherwise dismal economy. But if Tourre gets hit with a huge fine or is hung out to dry by Goldman, will it teach young analysts and associates to act with caution, since they're ultimately on their own? Will they come of age, careerwise, in an environment more prone to oversight? Or will they take the Tourre case as an example that you just can't get caught?
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Nancy Cook is a staff writer for Newsweek and Newsweek.com, covering business and economics. In 2010, she and a team of two editors won the New York Press Club Award for Best Business Reporting on the Internet for their seven-month multimedia project called “Jobbed: How America Works Now,” which examined the future of work, careers and the labor market as the country emerged from the recession.
Cook has written about the way the stimulus money affected a single neighborhood to luxury retailers thrilled by record Wall Street bonuses to accounts of rank-and-file employees whose careers were turned upside down by Lehman Brothers’ collapse. She also has reported on politics and economic policy for Newsweek.com’s national affairs blog, focusing on the intersection between Washington D.C. and Wall Street.
Prior to coming to Newsweek, she worked as a producer on the 2008 presidential campaign at National Public Radio and as an on-air reporter for WRNI, the Rhode Island NPR affiliate. There, her enterprise and feature reporting on a lackluster urban school system and a federal lawsuit against the state child welfare agency earned her two regional Associated Press awards. She graduated from Carleton College and Columbia Graduate School of Journalism, where she now teaches as an adjunct professor.
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