A Pallid Ending for a Much-Hyped Goldman Sachs Trial

Photographer: Peter Foley/Bloomberg

Fabrice Tourre

Seven months ago, The Market Now sat in on the civil trial of Goldman’s Fabrice “Fabulous Fab” Tourre and concluded that it was the dullest “historic” trial ever. Today, Tourre found out the penalties for his misdeeds. If after the trial and the brouhaha over Tourre’s liability you were somehow convinced that this boring trial would yield a major and important verdict, today’s news should clear things up.

Tourre was ordered to pay $825,000 for his role in Goldman’s Abacus deal, including $650,000 in penalties and returning $175,463 of his 2007 bonus. To put that in perspective: In 2007 Tourre reportedly was paid a total of about $1.7 million by Goldman Sachs Group Inc. So the total Tourre is paying is less than half of the money he earned in that year alone. The $650,000 is not tax deductible (TMN isn’t sure about the $175,463; maybe a tax attorney out there knows?), so assuming he’s in a high tax bracket this mid-level Goldman employee is probably surrendering all the money he made in 2007.

Beyond that, U.S. District Judge Katherine Forrest didn’t bother to order Tourre to avoid violating securities laws in the future, an essentially meaningless but symbolic punishment that underlines culpability in securities cases. And that seems about right: There was plenty of dishonesty from Tourre, but then again, as Matt Levine beautifully details, this case also had a victim — ACA Capital Management — with whom it’s hard to sympathize since ACA seems to have turned around and misrepresented the deal to other investors. The between-the-lines message here may be, “Pay back the money you earned for that year, and all of you get out of here. A pox on all your houses.”

That’s a paltry return on the Securities and Exchange Commission’s efforts to show that they were holding Goldman Sachs accountable. Whatever the lies here, the battle between Goldman, investor John Paulson and the investors in Abacus is a courtroom fight in which everyone is part of the same club and likely enough to meet sidling up to the same Wall Street bar.

Where, incidentally, there’s now plenty of money to share again: The average employee bonus went up 15 percent to $164,530, according to data released by the New York State Comptroller. That’s 14 percent below the $191,369 high of 2006; with the booming market, bonus pay has experienced its own quick recovery. Below , a chart of the growth in bonuses over the last two decades:

Wall Street Bonuses Over 20 Years

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