So the Feds got their man. Fabrice Tourre was convicted of misleading some of the most sophisticated investors in the world. He’s not the kind of guy who generates a lot of sympathy but it does seem a bit sad he’s taking the fall. I think this passage from Dealbreaker sums up the whole affair quite well.

For the SEC, the verdict offers a rebuttal to critics who have accused the agency of seeking to make fairly junior employees, such as Mr. Tourre, scapegoats for Wall Street’s wider failings.

But of course it is exactly not that; it is just proof that the SEC is at least able to make scapegoats of those junior employees. It goes to competence but not intentions. And it’s a mixed blessing for the SEC, as its critics are already re-opening the question of “if it’s that easy to win against Fab Tourre, why aren’t you throwing all the bastards in jail?”² The SEC has pretty much settled an Abacus-esque CDO case with each big bank,³ meaning that there’s presumably an army of Fabs still on Wall Street who’ve never been hauled before a jury. There’s a whole nother army of people who sold mortgages to Fannie and Freddie, and whose banks have now agreed to paynine-figure fines over misrepresentations in those deals too.

Basically the list of nine-figure settlements for securities misrepresentations is endless, and the list of individuals sued for actually making those misrepresentations is Fab. Five years after the financial crisis the SEC has discovered that it can convince a jury to hold individuals responsible for those misrepresentations. Well, an individual. Just the one. Poor Fab.