So much for change we can believe in at Mary Jo White's Securities and Exchange Commission.
Instead of doing the obvious and right thing and terminating the wholly gratuitous prosecution of the Fabrice "Fabulous Fab" Tourre -- which begins this morning in a Manhattan federal court -- White is trying to make Tourre the poster child for the financial crisis of 2008. This could not be further from the truth.
Anyone who has worked for more than a day in a Wall Street investment bank -- and I spent 17 years at variety of them -- would know instantly what the SEC apparently does not. A low-level vice-president such as Tourre has only one responsibility: to do what he is told to do and get deals done. Tourre was no more responsible for conceiving the Abacus synthetic collateralized debt obligation -- the security at the heart of the SEC's civil lawsuit -- than Trayvon Martin was for provoking his own death.
Like it or not, the Abacus deal was really no differently constructed than any other synthetic CDO manufactured and sold during the last decade. It's fair to question the morality and efficacy of such cockamamie deals, but there was nothing illegal about them.
What's more, the e-mails and documents that Senator Carl Levin's Permanent Subcommittee on Investigations released in 2010 make quite clear that all parties to the Abacus deal -- John Paulson, the hedge-fund manager on the short side; ACA, the Bear-Stearns-affiliated company putting the deal together; and the two banks on the long side of the deal, IKB Deutsche Industriebank and ABN-Amro -- were highly sophisticated and knew exactly the risks they were taking and voluntarily agreed to take them. It was Tourre's job to bring these parties together and get the deal done, so Goldman could get paid its $15 million fee.
Was Tourre indiscreet with his e-mails? Absolutely -- in one, he called a derivative he was selling “a product of pure intellectual masturbation.” But if complaining about our jobs was a crime, we'd all be facing the same Kafkaesque prosecution that White's SEC is pursuing against Tourre.
The Tourre prosecution is a sham and a huge waste of taxpayer money. To pursue a tiny fish like Tourre while the big fish, such as Dick Fuld of Lehman Brothers, Jimmy Cayne of Bear Stearns, Stan O'Neal of Merrill Lynch, Joseph Cassano of AIG and Anthony Mozilo of Countrywide Financial, swim away is the real crime. Free Fab, and free him now.
(William D. Cohan, a former investment banker and the author of “Money and Power: How Goldman Sachs Came to Rule the World,” is a Bloomberg View columnist. Follow him on Twitter.)