Months later, Mr. Birnbaum argued to the firm's top brass that Goldman should buy as much as $10 billion in subprime assets, according to an email, even though a plunge in risky home loans was roiling credit markets.

There is 'an extraordinary opportunity for those with dry powder,' he wrote in a late August email to Goldman Co-Presidents Gary Cohn and Jon Winkelried, among others. He was overruled, say people familiar with the matter at the time.

Messrs. Birnbaum, Cohn and Winkelried didn't respond to requests for comment.

Mr. Birnbaum was disciplined on and off the trading floor, colleagues say. A healthy eater with a daily workout regimen, he wouldn't touch the food at a McDonald's despite being famished after a long flight that July, recalls Kyle Bass, a friend and hedge-fund manager, in an interview at the time. Mr. Birnbaum also avoided participating in the burger-eating contests.

During the summer, Mr. Birnbaum made time for fun, spending time in the Hamptons, studying French to impress a date, and planning renovations to his loft apartment in Manhattan's trendy SoHo neighborhood, say people who knew him then.

Mr. Tourre recognized that the subprime boom was nearing an end, even as he arranged to sell mortgage products to the firm's clients, according to emails released by Goldman.

In January 2007, he described creating a thing 'which has no purpose, which is absolutely conceptual and highly theoretical.' He added: 'It sickens the heart to see it shot down in mid-flight . . . it's a little like Frankenstein turning against his own inventor.'

At the time, Mr. Tourre was putting together a synthetic collateralized debt obligation called Abacus 2007-AC1. Unlike securities that are backed by actualmortgages, the synthetic CDO represented a bet on a set of 'reference' mortgage-backed securities. The SEC alleges Mr. Tourre didn't tell clients that hedge-fund firm Paulson & Co. helped select the reference securities and was betting against them.

'The whole building is about to collapse any time now,' Mr. Tourre wrote to his girlfriend. 'Only potentialsurvivor, 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!!!' according to an email in the SEC case. 'Anyway, not feeling too guilty about this.'

Two months later, he wrote in another email to his girlfriend: 'According to Sparks, that business is totally dead, and the poor little subprime borrowers will not last so long!!!'

Still, Mr. Tourre created Abacus deals, including the one that become world-famous when the SEC filed its lawsuit. In a June 2007 email, Mr. Tourre told his girlfriend he had just landed in Belgium, where he managed to 'sell a few abacus bonds to widows and orphans that I ran into at the airport.'

Goldman says it disclosed all material information, adding that its clients were sophisticated investors who knew what they were getting into.