Securities & Exchange Commission v. Tourre
950 F. Supp. 2d 666
S.D.N.Y.2013Background
- In April 2010 the SEC sued Goldman Sachs & Co. and Fabrice Tourre for securities-law violations tied to the AC1 synthetic CDO.
- AC1 referenced assets via credit default swaps and involved a short position by Paulson; he helped select the reference portfolio.
- SEC alleged disclosures failed to adequately reveal Paulson’s role and his short position, rendering the offering misleading.
- Goldman settled its role in July 2010; Tourre’s trial was scheduled for July 15, 2013; this memorandum addresses pre-trial motions on evidence.
- The court considers six motions, including Daubert challenges to Bajaj, Davidson, Wagner, and Jaffee, and SEC in limine rulings on leading questions and advice-of-counsel evidence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Bajaj’s qualifications and methods under Daubert | SEC argues Bajaj lacks CDO expertise and reliable methodology. | Goldman contends Bajaj has general structured-finance expertise and should be allowed. | Bajaj not qualified on several key CDO specifics; some background testimony may be allowed with limits. |
| Admission of Jaffee and Wagner testimony | SEC contends both provide necessary professional background on CDOs and AC1. | Tourre asserts limits; Wagner’s narrative-style testimony should be restrained. | limite both; allow one to provide background, exclude improper narrative or legal conclusions; tailor scope for trial. |
| SEC 611 motion re leading questions for Goldman witnesses | SEC seeks permission to lead Goldman employees during testimony. | Tourre opposes broad leading-question allowances and argues for efficient examination. | Resolved on a witness-by-witness basis at pre-trial conference; general ruling deferred. |
| Advice of counsel evidence | SEC seeks preclusion of Tourre relying on counsel for legal disclosures. | Tourre contends context matters and should be able to discuss involvement of counsel. | Precluded to the extent it improperly suggests reliance on counsel; context of transaction allowed without legal-glossed focus. |
Key Cases Cited
- Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (Supreme Court 1993) (gatekeeping standard for expert testimony under Rule 702)
- Major League Baseball Props., Inc. v. Salvino, Inc., 542 F.3d 290 (2d Cir. 2008) (clarifies scope of expert testimony and admissibility)
- United States v. Bilzerian, 926 F.2d 1285 (2d Cir. 1991) (test for admissibility and limits of expert testimony)
- Marx & Co. v. Diners' Club, Inc., 550 F.2d 505 (2d Cir. 1977) (limitations on expert testimony and its use)
- Tin Yat Chin v. United States, 371 F.3d 31 (2d Cir. 2004) (flexible approach to qualifications and admissibility of expert testimony)