Goldman Sachs worker used inside information to make half a million in illicit profits: SEC
26 Nov 2015
A Goldman Sachs worker who was tasked with preventing wrongdoing at the bank spied on his co-workers and used the inside information and made around half a million in illicit profits.
According to the Securities and Exchange Commission's complaint filed Wednesday, Yue ''John'' Han, an associate in Goldman's surveillance group, made $460,000 trading stocks before fleeing to China.
The 30-year-old Chinese citizen had joined the investment bank in December and worked in the bank's compliance unit. It turned out however, that it was Han who needed watching, according to the SEC.
''We allege that Han's employer gave him access to confidential information so that he could help the firm detect and deter illegal activity, but he betrayed that trust by using the information for his own profit,'' Joseph Sansone, co-chief of the SEC's market abuse unit, said in a statement.
From July to October, Han made a killing on private communications of Goldman deal-makers and traded in personal accounts in his own name and that of a relative.
According to the SEC, Han ''could access the e-mails of Goldman Sachs' employees - including employees in the firm's investment banking division, which was responsible for advising clients on M&A transactions - without alerting the employees themselves.''
The SEC yesterday charged Han, an associate in Goldman's Surveillance Analytics unit, with misappropriating information on the pending takeovers of Zulily, KLA-Tencor Yodlee and Rentrack to buy out-of-the money call options contracts on those companies, which paid off with their acquisition.
The SEC has frozen the trading accounts of Han and his relative who benefited from inside information.
The SEC's complaint does not give any indication that Han's allegedly illegal activity had been spotted by Goldman.
According to commentators, he might have evaded Goldman's standard employee surveillance by not to registering the brokerage accounts he then used to make the insider trades.
''If the allegations are true, Han violated our trust and ignored extensive training that he received so we are pleased that the authorities are pursuing action against him,'' said Michael DuVally, a Goldman Sachs spokesperson.
