NEW YORK (Bloomberg) — Fabrice Tourre, the Goldman Sachs Group Inc. executive director sued by the Securities and Exchange Commission for fraud, disputed regulators' allegations in a filing yesterday.

Tourre in his filing today in federal court in Manhattan denied wrongdoing and said he was aware that hedge fund Paulson & Co. "was considering taking some or all of the short side" of a transaction involving the 2007 sale of a collateralised debt obligation called Abacus 2007-AC1 that was linked to sub-prime mortgages.

Tourre responded four days after Goldman Sachs, the most profitable securities firm in Wall Street history, agreed to settle its role in the case for $550 million. The firm also will cooperate in the SEC's investigation of Tourre, 31, who remains an employee. Tourre is on leave and his legal expenses are being paid by New York-based Goldman Sachs.

"The purported claims against Mr. Tourre and the allegations upon which they are based are improperly vague, ambiguous and confusing, and omit critical facts," the filing said. "Mr. Tourre, a French citizen and engineer by training, reasonably relied on Goldman Sachs' institutional process to ensure adequate legal review and disclosure of material information, and cannot be held liable for any alleged failings of that process."

In April, Tourre testified alongside two Goldman Sachs colleagues and one former employee at a Senate subcommittee hearing about the company's business practices. Tourre, 31, told the panel he planned to fight the suit.

Lloyd Blankfein, Goldman Sachs's chairman and chief executive officer, also testified about the firm's mortgage-securities business in the years leading up to the biggest financial crisis since the Great Depression.

The dispute revolves around the 2007 sale of a collateralised debt obligation called Abacus 2007-AC1. Goldman Sachs created and sold the CDO, which was linked to sub-prime mortgages, without disclosing to investors ACA Management LLC and IKB Deutsche Industriebank AG that Paulson & Co. helped pick the underlying securities and bet against the vehicle, the SEC said. Goldman Sachs didn't admit or deny wrongdoing in the SEC accord, disclosed on July 15. The firm acknowledged it made a "mistake" and that marketing materials tied to the offering had "incomplete information," according to the agency.

In its complaint, the SEC alleged that Tourre misled ACA into thinking that Paulson planned to invest in the equity, or riskiest piece, of the deal instead of betting against it by buying credit protection.