By Jonathan Stempel
NEW YORK (Reuters) - A $1 million gulf stands between the top U.S. securities regulator and former Goldman Sachs Group Inc
In papers filed Tuesday night with the U.S. District Court in Manhattan, Tourre said the U.S. Securities and Exchange Commission was not justified in demanding that he pay $1.15 million, including a $910,000 fine, as punishment.
He said the penalty should not exceed $65,000.
Tourre was accused by the SEC of misleading investors in a 2007 mortgage transaction that soon imploded, the synthetic collateralized debt obligation Abacus 2007-AC1, by concealing how hedge fund billionaire John Paulson helped construct the transaction and bet that it would fail.
A federal jury found Tourre liable in August on six securities fraud counts.
U.S. District Judge Katherine Forrest, who presided over Tourre's trial, must now decide what punishment to impose. Tourre may then appeal the verdict. Goldman Sachs is paying his legal fees.
Tourre's argument is that jurors did not find that his conduct caused or threatened losses to support the penalty sought by the SEC. The regulator said investors lost $1 billion on Abacus.
"There was no evidence, and no finding, that Mr. Tourre's conduct had any impact whatsoever on the economic performance of AC1 and on the investors who bought and sold exposure" to its underlying securities, his lawyers wrote.
Tourre said any fine should be no more than $65,000 because jurors "necessarily found only a single scheme to defraud" ACA Capital Holdings Inc, which helped choose Abacus assets.
The SEC said Tourre misled ACA into believing Paulson would be an equity investor in the CDO. In reality, the SEC said Paulson made $1 billion by betting the other way.
Spokesmen for the SEC did not immediately respond on Wednesday to requests for comment.
LINKS TO BONUS
Tourre grew up in a suburb of Paris, and is now pursuing a doctorate in economics at the University of Chicago.
He became a symbol of the 2008 financial crisis, in part because of an email in which he called himself "fabulous Fab".
His case is one of the government's biggest legal victories over conduct said to have contributed to the crisis.
Tuesday's court papers also included a statement from Daniel Sparks, the head of Goldman's mortgage business when Tourre worked there. Sparks argued that the SEC was wrong to conclude that Tourre's bonus in 2007 was linked to Abacus.
Sparks called Goldman's setting of bonuses "a subjective process" and said that any one transaction such as Abacus that did not materially benefit or hurt the bank "would not likely be a focus in the bonus determination process".
Tourre testified that he made $1.7 million in salary and bonus in 2007. He was 28 years old at the time.
The SEC originally sued Goldman and Tourre over Abacus in April 2010. Goldman agreed three months later to pay a $550 million fine in a settlement, without admitting wrongdoing.
The case is SEC v. Tourre, U.S. District Court, Southern District of New York, No. 10-03229.
(Reporting by Jonathan Stempel in New York; Editing by Stephen Powell)