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relates to Latest Negative Rate Experiment Comes With a New Twist in Israel relates to Deutsche Bank Rebound Hinges More Than Ever on Trading Unit relates to New Europe Lockdowns Raise Prospect of ECB Stimulus Surprise relates to Bank of Japan to Hold as Virus Spread Abroad Raises Risks: Decision Guide relates to G-20 Plans Extraordinary Nov. 13 Meeting to Discuss Debt Relief relates to Germany Moves to Shutter Bars and Restaurants for One Month relates to Bank of Canada Sees Output Gap Persisting Until 2023 relates to S&P 500 Drops 2%, Europe Sinks to Five-Month Low: Markets Wrap relates to Zambia Secures China Debt Relief Before Key Bondholder Vote
Markets

Goldman’s Unwelcome Streak: A String of Insider Trading Charges

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Goldman’s Unwelcome Streak: A String of Insider Trading Charges

  • Third Goldman banker charged over insider trading in 18 months
  • Banker arrested Friday for passing deal tips to restaurateur
Goldman Sachs Hit by Third Insider Trading Charge in 18 Months

Goldman Sachs Group Inc. has built itself into a global dealmaking force whose bankers are often stitching together the biggest and most sensitive corporate transactions.

But a trio of charges in just the last 18 months has threatened to tarnish that standing.

Bryan Cohen, a Goldman investment banker in New York, was arrested Friday over allegations of insider trading, court records show. It comes just months after another banker was sentenced to three months in prison for sharing illicit deal tips. And a third pleaded guilty last year to leaking information to a National Football League linebacker in exchange for tickets to games.

Such accusations strike at the sanctity of the business where corporate titans seek out the advice of large investment banks to navigate discussions over deals that can move billion of dollars in market prices. The allegations highlight the struggles of even top-tier banks in trying to successfully clamp down on such misconduct. For Goldman, the cases against these junior bankers each seem to have been carried out independent of each other.

Cohen, a vice president, leaked nonpublic information for almost three years in exchange for cash as part of an international insider-trading scheme that led to $2.6 million in illicit gains, according to a separate complaint from the U.S. Securities and Exchange Commission that didn’t identify his employer.

Some information was tied to pending deals involving Syngenta AG and Buffalo Wild Wings Inc., the documents show.

A Goldman spokeswoman confirmed Cohen was an investment banker who worked in the consumer retail division. The bank was unaware of the allegations until Cohen was arrested on Friday morning at his apartment in Manhattan. He has since been placed on leave.

Read more: Ex-Goldman Sachs bankeradmits in court to insider trading

“We are cooperating with the authorities on the situation regarding Mr. Cohen,” Nicole Sharp, a representative for the firm, said in an emailed statement. “Protecting client confidential information is our highest internal priority and we condemn this alleged behavior.”

Cohen appeared before U.S. Magistrate Judge Stewart D. Aaron on Friday and was released on a $250,000 bond pending a conference scheduled for Tuesday. Patrick Smith, an attorney representing Cohen, declined to comment.

Cohen, 33, shared the information with a trader who hasn’t been identified and who subsequently passed it on to George Nikas, who realized the gains, according to the SEC complaint. Nikas, a 54-year-old New York restaurateur who owns the chain GRK Fresh, was also charged by prosecutors. Cohen expected and received an unspecified amount of cash in exchange for the tips he provided, the filings show.

Cohen has been with Goldman for almost 10 years, starting in the London office before being transferred to New York in 2017. The insider tips were shared between April 2015 and November 2017, according to the SEC complaint.

The complaint offers a detailed view of how the alleged scheme unfolded. For example, shortly after Cohen moved to New York, Buffalo Wild Wings contacted Goldman to help as the Minneapolis-based casual dining chain was approached by Arby’s Restaurant Group Inc. Cohen was made aware of the potential acquisition the same day, Oct. 17, 2017. Nikas purchased 22,000 Buffalo Wild Wings shares between Oct. 20 and Oct. 27 for $2.5 million, selling 9,000 of them by Nov. 1 for an initial profit of $79,074.

Acquisition News

After the market close on Nov. 13, news broke of a potential Buffalo Wild Wings acquisition. The next day, the restaurant chain’s stock price rose 24%, and Nikas sold his remaining shares for a profit of $343,298, according to the complaint.

Nikas was indicted on Oct. 7 along with a friend, Telemaque Lavidas, on charges they conspired to steal material non-public information about Ariad Pharmaceuticals Inc. from Lavidas’ father, who served on the company’s board until 2016, according to court documents unsealed Friday. Takeda Pharmaceutical Co. agreed to buy Ariad, a maker of cancer drugs, for $4.66 billion in 2017.

Nikas was also accused of participating in a “large-scale, international insider trading ring” from 2012 to 2017, during which he received information about acquisitions and potential acquisitions of publicly traded companies from an unidentified securities trader in Switzerland, according to the indictment. Nikas didn’t immediately respond to a message seeking comment.

Lavidas was arraigned on Friday before U.S. District Judge Denise L. Cote and held without bail pending trial due to a potential risk of flight, according to court records. His attorney, Jennifer Achilles, didn’t immediately respond to an email seeking comment.

Cohen was arrested at 6 a.m. on Friday and appeared in court later that afternoon. He was released after surrendering his passport, along with some helpful advice from the judge: “Refrain from conduct alleged in charging document.”

— With assistance by Chris Dolmetsch