The trial of former Goldman Sachs bond trader Fabrice Tourre was about "Wall Street greed," a lawyer for the US Securities and Exchange Commission said as the trial began yesterday.

The SEC accuses Mr Tourre of misleading investors in a mortgage investment called Abacus 2007-AC1 by not telling them that a hedge fund was involved in selecting the underlying assets and betting against it.

Matthew Martens, a lawyer for the SEC, told the jury the deal Mr Tourre put together was “secretly designed to maximize the potential it would fail” to the benefit of the hedge fund, which made about $1 billion.

“In the end, Wall Street greed drove Mr Tourre to lie and deceive,” Mr Martens said.

But Pamela Chepiga, a lawyer for Mr Tourre, countered that the SEC was trying to turn her client into a “scapegoat.”

“This is not a case about whether you approve or disapprove of Wall Street,” she said.

The trial, scheduled to last three weeks, stems from a lawsuit the SEC filed against Goldman Sachs and Mr Tourre in 2010.

Mr Tourre, who is no longer with Goldman and is earning a doctorate in economics at the University of Chicago, is on trial alone after Goldman agreed to pay a $550 million settlement in July 2010.

Mr Tourre, wearing a black suit and orange tie, sat with his counsel as the lawyers made their opening arguments. He did not speak during yesterday’s proceedings, although he is expected to testify later in the trial.

The SEC contends Mr Tourre, at the time a vice president at Goldman, failed to disclose that Paulson & Company , the hedge fund run by billionaire John Paulson, was involved in picking mortgage securities tied to the Abacus investment and that it was also shorting, or betting against, it.

Mr Martens said Mr Tourre, the principal Goldman employee involved in the Abacus deal, had a duty to be truthful with investors. Instead, he hid “critical information” in order to get them to buy in.

Mr Tourre also misled ACA Capital Holdings , a third-party firm ostensibly brought in to select the securities included in the CDO, into believing that Paulson was an equity investor in Abacus rather than taking a short position, Mr Martens said.

The SEC contends ACA would not have participated had it known Paulson was betting against the investment. A different firm decided not to participate as ACA’s portfolio selection agent when Mr Tourre told it Paulson was going short, Mr Martens said.

“His solution was trickery and half-truths,” he said. “His solution was securities fraud.”

Mr Martens also displayed a much-cited email sent on January 23rd, 2007, by Mr Tourre to his girlfriend at the time, saying of the financial markets that the “whole building is about to collapse anytime now.”

“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 monstruosities!!!” the email said.

Investors lost more than $1 billion after almost all the securities tied to the transaction were downgraded, the SEC says. Paulson earned about the same amount thanks to his bet, the SEC says.

Goldman made $15 million in fees on the deal, Mr Martens said.