Ex-Goldman Trader Accused of Insider Trading
A former Goldman Sachs Group Inc. (GS) trader and his father were accused by U.S. regulators of making illegal trades based on confidential information related to the Wall Street firm’s exchange-traded fund investments.
Spencer Mindlin, 33, and Alfred Mindlin, 68, reaped at least $57,000 in illicit profits by trading in December 2007 and March 2008 “with knowledge of massive, market-moving trades” that Goldman Sachs planned to execute in four securities, the Securities and Exchange Commission said today in a statement. The Mindlins denied the claims, which were outlined in an administrative proceeding filed by the SEC’s enforcement unit.
The younger Mindlin, who worked on Goldman Sachs’s ETF desk, learned of the firm’s plans to buy and sell large amounts of securities underlying an ETF known as SPDR S&P Retail ETF, according to the order. He tipped his father, and the two took long and short positions depending on whether Goldman Sachs intended to buy or sell, the order said. The insider-trading claims are the SEC’s first involving ETFs, the agency said.
“We are aggressively working to identify and prosecute illegal insider trading across multiple markets and derivatives products regardless of the complexity of the trading pattern,” Sanjay Wadhwa, associate director of the SEC’s New York regional office, said in the statement. The agency is seeking disgorgement of ill-gotten gains and unspecified penalties.
The Mindlins did nothing wrong and the allegations shouldn’t have been brought against them, according to their lawyer, Robert Knuts of Park & Jensen LLP.
“This is a situation where a son working in the securities industry suggested a trading strategy to his father and helped the father understand and execute the strategy,” Knuts said in an e-mailed statement. “That strategy was not based on any confidential information obtained by the son. Instead, it is based on the well-known re-balancing phenomenon within the ETF industry and publicly available information.”
The elder Mindlin is a certified public accountant, according to the SEC.
SEC investigators typically pursue insider-trading cases in federal court rather than through an administrative proceeding, where penalties are limited. The agency withdrew claims last month against former Goldman Sachs director Rajat Gupta after he sued the agency, arguing that an administrative hearing denied him the right to a jury trial.
Goldman Sachs spokeswoman Andrea Raphael said in an e- mailed statement that the firm “fully cooperated” with the SEC’s investigation.
“All of the trading was conducted in private, undisclosed accounts held outside of Goldman Sachs and none of the trading involved client information,” Raphael said.
Spencer Mindlin left Goldman Sachs in 2009, according to the administrative order.
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