Goldman Sachs Banker Tourre Said to Agree to Testify in Senate

April 21 (Bloomberg) -- Fabrice Tourre, the Goldman Sachs Group Inc. banker at the center of fraud allegations against the firm, has agreed to testify and may defend his actions at a Senate hearing next week, said two people briefed on the plan.

Tourre, who was accused by the U.S. Securities and Exchange Commission of misleading investors in a collateralized debt obligation, will appear before the Senate Permanent Subcommittee on Investigations on April 27 along with Goldman Sachs Chief Executive Officer Lloyd Blankfein, said the people, who declined to be identified because the plan isn’t public. Tourre, 31, will tell the panel he did nothing wrong, one of the people said.

Goldman Sachs, the most profitable firm in Wall Street history, was sued by the SEC on April 16 over claims that the company and Tourre misled investors by failing to disclose that Paulson & Co., the hedge fund run by billionaire John Paulson, helped select loans for the CDO and then bet against them.

Tourre, the only individual named in the SEC case, was “principally responsible” for creating and marketing the CDO known as Abacus 2007-AC1, the agency said in its complaint.

“The whole building is about to collapse anytime now,” Tourre wrote to a friend in a January 2007 e-mail, according to the complaint. “Only potential survivor, the fabulous Fab... standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstruosities!!!”

‘All Necessary Steps’

Goldman Sachs, which is contesting the SEC’s claims, has said it “will take all necessary steps to defend the firm.” Tourre and Blankfein have agreed to speak publicly because they want to show Goldman Sachs has nothing to hide, the people said.

Tourre “believes that he indicated” to investors that Paulson was interested in taking a “short” position on the deal, meaning he was betting against it, Greg Palm, Goldman Sachs’s co-general counsel, said this week.

Pamela Chepiga, Tourre’s lawyer at Allen & Overy LLP, didn’t return phone calls and e-mails seeking comment. Goldman Sachs spokesman Lucas van Praag didn’t immediately respond to a request for comment.

Senator Carl Levin, the Michigan Democrat who leads the investigation subcommittee, is holding hearings to explore the causes of the worst economic crisis since World War II. Witnesses from credit-rating companies Moody’s Corp. and Standard & Poor’s will testify on April 23.

Tourre will be interviewed by the committee’s staff before appearing at the hearing, one of the people said. The panel’s chief counsel, Elise Bean, declined to comment.

To contact the reporter on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net.