Ex-Goldman Sachs Group Inc. banker Matthew Korenberg, the subject of a years-long insider-trading probe tied to Galleon Group LLC, was told he won’t be sued by regulators.
John Hueston, a lawyer for Korenberg, said in a telephone interview that the U.S. Securities and Exchange Commission, which was ready to file a civil complaint 18 months ago, officially “de-authorized” his client as a lawsuit target. Hueston said it’s “extraordinary” for the SEC to be persuaded to drop a case it was ready to proceed with.
“Too often cases are filed and reputations are ruined before mistakes of fact and judgment are realized,” Hueston said. “There has been real cost here.”
The SEC has had mixed success in trials over insider-trading allegations. It lost a jury verdict last month against STEC Inc.’s former chief executive officer, Manouchehr Moshayedi, whom it accused of making $134 million from insider information. That was its third loss since October out of four such cases to go trial.
More than 20 people have been convicted of insider trading tied to the investigation of Galleon Group and the fund’s co-founder, Raj Rajaratnam. He was convicted in 2011 and is serving an 11-year prison sentence for masterminding one of the most sprawling insider-trading schemes in a generation. His brother Rengan is on trial for insider trading.
The SEC and U.S. prosecutors were investigating Korenberg for insider trading involving Abbott Laboratories Inc.’s acquisition of Advanced Medical Optics Inc. in 2009.
After a separate investigation, ex-Baltimore Orioles third baseman Doug DeCinces was charged with making $1.3 million in profit from insider information about that transaction.
The DeCinces case isn’t connected to Korenberg’s, Hueston said. A parallel criminal investigation of Korenberg was previously closed, according to the lawyer.
Korenberg left Goldman Sachs at the end of 2012 and has been focused on defending against the allegations, Hueston said. He was a banker at Goldman in San Francisco and now lives in the Philadelphia area, Hueston said.
John Nester, a spokesman for the SEC, declined to comment on Korenberg’s case.