We suggested not too long ago that the SEC was perhaps on thin ice with its case against Fabrice Tourre, the lone Goldman Sachs employee charged in the ABACUS-related crimes. Recall Goldman Sachs itself settled for $550 million, the largest civil fine the agency has ever extracted from a company.

To many people, the notion that the low-level Tourre was the only one charged is absurd. Some have wondered why his boss Jonathon Egol and others have not been targeted. "Although it is fair to wonder why such outright gambling in the form of synthetic CDOs was permitted at all on Wall Street--Hello, SEC, are you there?--it is unfair for Tourre to be singled out by the regulators for doing his job," according to one commentator in Bloomberg.

The biggest weakness for the SEC may well be a lack of compelling evidence that Tourre was indeed bent on fleecing investors. The SEC will draw upon a lot of emails that will prove to be damaging evidence. But there will be lots of other emails in the other direction, and recent history has shown that cases built on emails are not necessarily strong ones. It may be that the agency offered some very generous settlement terms but were rebuffed, forcing a trial.

We've said before that Goldman Sachs should be hoping that justice prevails and the SEC drops the case. In any case, Fabulous Fab may have no choice but to embark on a scorched earth policy and call every Goldman Sachs executive possible to the stand to prove that Tourre was a small fry. This could be very interesting.

For more:
- here's the commentary

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