NEW YORK — A former Goldman Sachs trader at the center of a toxic mortgage deal lost a courtroom battle Thursday, giving Wall Street’s top regulator its first significant victory in a case stemming from the financial crisis.
A jury found the trader, Fabrice Tourre, liable for civil securities fraud, delivering the Securities and Exchange Commission a long-sought courtroom victory in its uneven campaign to punish Wall Street over the crisis.
Tourre’s three-week trial in US court in lower Manhattan offered both sides — the government and Tourre — a shot at repairing their bruised reputations.
For the SEC, an agency dogged by its failure to thwart the crisis, the case offered a shot at redemption following one courtroom disappointment after another, including two similar cases that crumbled last year. For Tourre, who abandoned his trading career to pursue a doctorate in economics, the threat of being barred from Wall Street came second to the black mark on his name.
The SEC threw innumerable resources at Tourre’s case, underscoring its importance to the agency. Five years after Wall Street risk-taking nearly toppled the economy, the SEC has taken only a handful of employees to court in connection with the crisis; most cases have been settled.
“There is no denying the importance of this to the SEC, because it is a financial crisis case,” said Stephen J. Crimmins, a partner at the law firm K&L Gates and former deputy chief litigation counsel in the SEC enforcement division who was not involved in this case.
Yet even with the triumph over Tourre, the SEC could still face scrutiny. Some critics have questioned why the agency chose to make Tourre — a midlevel employee who was stationed in the bowels of Goldman’s mortgage machine — the face of the crisis. Rather than aim at a high-flying executive, the agency pursued someone barely known on Wall Street.
Those concerns echo another SEC crisis-era case, in which a jury cleared a midlevel Citigroup employee, questioning why the agency had declined to charge more senior executives at the bank.
“There are bigger fish out there swimming fat and free, and they made a lot more money from the mess than Tourre ever dreamed of making,” said Erik Gordon, a professor of law and of business at the University of Michigan.
It is unclear whether Tourre will appeal the verdict.
After two days of deliberation, The nine-person jury concluded that Tourre had misled investors about the mortgage deal at the heart of the case. Of the seven charges against Tourre, the jury found him liable on six. He was found not liable of perhaps the most specific fraud charge, which contended that he had knowingly made an untrue or misleading statement.
Judge Katherine B. Forrest has the final say on the penalty Tourre must pay, be it forfeiture of profits or a fine. The fine could range from $5,000 to $130,000 for each violation.
Tourre could also be barred from the securities industry, but any decision to prohibit Tourre from working on Wall Street, and for how long, lies solely with the SEC.