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From Securities Regulation Daily, May 31, 2018

SEC charges Goldman Sachs banker with insider trading

By Anne Sherry, J.D.

The SEC charged an investment banking executive at Goldman Sachs with insider trading based on information he learned at the bank. According to the complaint filed in the Southern District of New York, between February 2015 and July 2017, the defendant profited by about $140,000 by trading in the securities of 12 companies involved in impending mergers, acquisitions, and tender offers. He attempted to conceal the conduct by trading in a friend’s account (SEC v. Jung, May 31, 2018).

The defendant worked as an associate in Goldman’s New York office until July 2015, when he transferred to the San Francisco office as a vice president in investment banking. The complaint identifies 12 publicly traded companies in whose securities the banker traded based on knowledge of their involvement in impending transactions:

  • CA Inc.;
  • FEI Company;
  • Fairchild Semiconductor International Inc.;
  • Foresight Energy LP;
  • Gigamon Inc.;
  • KLA-Tencor Corporation;
  • Microsemi Corporation;
  • Nimble Storage Inc.;
  • NXP Semiconductors N.V.;
  • SanDisk Corporation;
  • WebMD Health Corp.; and
  • W.R. Grace & Co.

Several of these companies retained Goldman to advise them in the transactions. In other cases, the company in whose securities the defendant traded was negotiating with a Goldman client or potential client.

The defendant was subject to an internal compliance policy about safeguarding confidential information as well as another policy prohibiting employees from holding outside brokerage accounts or requiring pre-clearance of trades. To avoid detection, the defendant opened an account in the name of a friend living in South Korea, whom the SEC names as a relief defendant. The SEC used data analysis to uncover the suspicious trading, according to the agency’s press release, and matched the defendant to transactions in the friend’s account based on IP address.

"Jung tried to insulate himself by allegedly placing trades in the brokerage account of a friend who lived overseas," said Joseph G. Sansone, Chief of the SEC’s Market Abuse Unit. "Like others before him, Jung’s alleged scheme failed when our data analysis uncovered the account’s suspicious trading pattern and, despite Jung’s attempts at evasion, traced the trading back to him."

The case is No. 18-cv-04811.

Attorneys: Joseph G. Sansone and Gary Y. Leung, Securities and Exchange Commission, for the SEC.

Companies: CA Inc.; FEI Co.; Fairchild Semiconductor International Inc.; Foresight Energy LP; Gigamon Inc.; KLA-Tencor Corp.; Microsemi Corp.; Nimble Storage Inc.; NXP Semiconductors N.V.; SanDisk Corp.; WebMD Health Corp.; W.R. Grace & Co.

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