Lessons From NY Times Investigative Journalism: Destroy Your Old Computers

A new article about the old SEC case against a young Goldman banker offers some intended takeaways, but this inadvertent one was the most interesting

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The New York Times has a sprawling front page article today serving as an update on a year-old story. In April 2010, Goldman Sachs and one of its employees were sued by the Securities and Exchange Commission for fraud in conjunction with a complex security it sold to a client. Goldman settled the case, but it remains outstanding against the banker, who was in his late 20s at the time of the incident. This article's authors Louise Story and Gretchen Morgenson bill it as a hard-hitting investigative piece, though it provides little surprising insight into the case. Instead, its biggest revelation comes from their investigative tactics.

The article essentially investigates the status of the SEC's case against Fabrice Tourre, the only Goldman banker that was named in the suit. First, let's look at its four big takeaways, none of which are particularly shocking. Then, we'll look at its inadvertent takeaway that has commentators buzzing.

The Intended Takeaways

Tourre Couldn't Have Acted Alone

An unnamed source who worked on the Goldman mortgage desk wonders why Tourre was the only one that the SEC went after, according to the Times. "I just can't even begin to tell you how junior and insignificant his role was," the source told the paper. The team worked very closely together, so others would have been aware and involved in the deal at the heart of the SEC case.

Although this news might surprise some readers, anyone familiar with Wall Street knew this already. For starters, investment banks structure their groups into deal teams. But Goldman, more than any other, is almost obsessive about the importance of teamwork: it even shapes its recruiting strategy to favor athletes who it believes better understand how to succeed in a team-based environment. So it's hard to call this news, but it does raise the question: why was Tourre the only one who the SEC went after if an entire team was likely aware of and involved with the deal?

Why Tourre Was the Sole Target

The NY Times answers that question too. And this is another answer that no one should be shocked to hear: Tourre wasn't careful with his e-mails. You might remember all of the embarrassing and seemingly incriminating e-mails that were sent from the young banker that surfaced in the SEC filing a year ago. Someone with knowledge of the SEC case told the Times that Tourre's failure to be discreet made him an easy target.

There's little doubt that Wall Street has taken note of Tourre's mistakes. Any responsible investment banking managing director likely had a talk with his or her team about e-mail correspondence after the SEC case became common knowledge. The message would be clear: do not put in writing anything that can come back to haunt you. In particular, any internal, strategic views of the market should be said, not written. If Tourre had been a little more careful, he'd still be making millions as a Goldman banker.

Thrown Under the Bus?

But he's not. He's on paid leave (which you can bet is just his measly six-figure salary, without any seven-figure bonuses). The Times reveals that Tourre decided not to use the legal counsel that Goldman offered, as their interests have diverged. At this point, Goldman has swept the whole incident aside, having paid its $550 million fine. The case continues for Tourre, however. While Tourre is trying to portray himself as a part of a collaborative effort, Goldman says that he worked on a team but that he was "principally responsible" for the deal, according to the Times.

Presented by

Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.

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