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Goldman's 'fabulous' fall guy?

By David Ellis, staff writer

NEW YORK (CNNMoney.com) -- As Goldman Sachs mounts its defense against the fraud suit brought by the Securities and Exchange Commission, many questions still surround the employee that allegedly helped broker the now infamous deal.

Fabrice Tourre, the 31-year-old French trader who paired up hedge fund operator John Paulson and two bullish institutional investors on the U.S. housing market, was a topic of interest during two separate conference calls Goldman executives hosted with investors and reporters Tuesday.

Executives at the company were asked whether Tourre helped create similar securities, including those that Goldman asked AIG (AIG, Fortune 500) to insure against mortgage defaults before the credit markets collapsed.

Goldman executives were also questioned whether the firm had reviewed all of Tourre's other work at the company.

Greg Palm, Goldman's co-general counsel, offered few details about what kind of scrutiny Tourre has come under since the SEC first lodged its civil suit against the company last Friday. Palm said that the firm's overall mortgage dealings went under the microscope once the investigation was launched by the federal agency in August 2008.

According to the SEC's suit, Tourre wrote in a 2007 e-mail that "the whole building is about to collapse anytime now" and that the "only potential survivor" was "the fabulous Fab[rice Tourre] ... standing in the middle of all these complex, highly leveraged, exotic trades he created."

There has been already speculation that the company could be setting up Tourre as a potential fall guy for the scandal.

Since last Friday's announcement by the SEC, the London-based employee has been placed on paid leave indefinitely, according to a company spokesman.

The company also said it deregistered Tourre with the British regulatory agency Financial Services Authority. It was not immediately clear why Tourre was having his credentials removed, although other news reports suggested it was related to him taking leave from the company.

Goldman Sachs (GS, Fortune 500) reported profits of $3.5 billion Tuesday, beating analysts' estimates. Shares of the company however, fell over 1% in afternoon trading.

--CNN's Mythili Rao also contributed to this report To top of page

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