Academia as a Way Station between Wall Street and the Big House

ACADEME BLOG

One of the few Wall Street insiders to have been prosecuted for fraud related to the sale of sub-prime mortgage securities has been Fabrice Tourre, also known as “Fabulous Fab.” In 2007, just ahead of the economic collapse caused in great part by the bursting of the housing bubble, Tourre made $1.7 million largely from selling sub-prime-mortgage securities to investors—when he clearly knew that those securities were extremely over-priced and risky, if not almost certain to fail.

Worse, as an employee of Goldman-Sachs, Tourre communicated with John Paulson, who became one of Wall Street’s most prominent hedge-fund managers by promoting investments in credit-default swaps that became increasingly profitable as the housing market tanked. In effect, Tourre and Goldman Sachs identified for Paulson, then a client, which mortgage-backed securities were the most likely to fail, even as they were promoting those securities to other clients as solid investments.

Before the case…

View original post 641 more words

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s