By Nate Raymond
NEW YORK (Reuters) - An infamous email in which former Goldman Sachs vice president Fabrice Tourre referred to himself as "the fabulous Fab" should not be introduced at his securities fraud trial, his lawyer said on Tuesday.
Lawyer Sean Coffey said the email was a personal communication between Tourre and his girlfriend and was irrelevant to the case.
"These are emails that should be closely scrutinized," Coffey told the judge who will oversee the trial.
The U.S. Securities and Exchange Commission has accused Tourre of misleading investors in a mortgage securities investment in 2007 called Abacus 2007-AC1 that it said was designed to fail.
Goldman Sachs Group Inc
Tourre sent the email on January 27, 2007, to his girlfriend, Marine Serres, who worked at Goldman Sachs in London. In it, he said the "whole building is about to collapse anytime now," referring to financial markets.
"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 monstrosities!!!"
The SEC referred to the email in its lawsuit in April 2010, it was later released in full by the U.S. Senate and "fabulous Fab" became the nickname by which Tourre was known in the media.
The SEC said Tourre misled investors by failing to disclose that the hedge fund run by billionaire John Paulson helped pick the mortgages underlying the Abacus investment and later bet against it.
In court on Tuesday, Matthew Martens, a lawyer for the SEC, said the email showed Tourre's state of mind as the investment was put together. "That's a critical email to our case, and I plan on opening on it," Martens said.
Coffey said Serres wasn't even involved in the creation of the Abacus investment, making the email irrelevant.
U.S. District Judge Katherine Forrest said she will "look closely" at the email and decide if the SEC can include it in its opening arguments, expected for Monday.
DROPPED WITNESS PROBE
The arguments over the email followed a series of rulings by Forrest on what exactly the parties could introduce as evidence and discuss at the trial.
Among them, Forrest said the SEC must give Tourre's lawyers more details of a separate investigation by the SEC into Laura Schwartz, who is a witness in the case against Tourre.
The SEC has said Schwartz was Tourre's primary point of contact at ACA Financial Guaranty Corp, which helped put the Abacus investment together and then insured it.
Tourre's lawyers have sought to challenge Schwartz's credibility because she herself was under investigation in relation to a different investment in which ACA Financial was involved.
Last week, Schwartz's lawyers said in court documents that the SEC had dropped its investigation into Schwartz.
Forrest on Tuesday ordered the SEC to produce transcripts of three days of depositions the SEC took from Schwartz during the probe. She also ordered the SEC to reveal any agreements it had reached with Schwartz before it decided to end the investigation.
"The timing is such that I believe there should be limited inquiry into bias," Forrest said.
Robin Alperstein, a lawyer for Schwartz, denied that any such agreements existed, saying, "there is no deal."
The case is SEC v. Tourre, U.S. District Court, Southern District of New York, No. 10-03229.
(Reporting by Nate Raymond; Editing by Eddie Evans and Andrew Hay)