Insider Trading At Goldman Sachs While Merrill Lynch Misleads Investors (#GotBitcoin?)
Sec Issues $3 Million Award To Two Former Merrill Lynch Whistleblowers. Insider Trading At Goldman Sachs While Merrill Lynch Misleads Investors (#GotBitcoin?)
Former Merrill Lynch advisers alleged the company made misleading statements related to a struggling investment product.
Two former Merrill Lynch financial advisers who alleged the company made misleading statements related to a struggling investment product were the whistleblowers who received a $3 million payout by the Securities and Exchange Commission.
The SEC announced the award June 3 but didn’t identify the tipsters or which case the award is connected to, in keeping with its policy. Rebecca Katz, a senior counsel at law firm Motley Rice LLC in New York who represents both whistleblowers, identified the company involved in the case as Merrill Lynch. Merrill Lynch declined to comment.
The Wall Street Journal previously reported that former Merrill Lynch financial advisers Glen Ringwall and Mark Manion were concerned about a lack of adequate disclosure on certain fixed-costs related to a structured-note product called Strategic Return Notes, which quickly lost value after being issued in 2010.
The financial advisers secretly taped calls with executives at Merrill, during which they were told not to suggest to complaining clients that the product was flawed. Messrs. Ringwall and Manion left the firm for rival UBS Group AG in 2012 and then filed a whistleblower complaint over the notes with the SEC.
Messrs. Ringwall and Manion couldn’t be reached directly. UBS provided a statement it said came from the two advisers. “The SEC press release acknowledges and applauds our efforts,” the statement said. “We feel vindicated and have no further comment.”
Merrill Lynch, the brokerage arm of Bank of America Corp. , paid $10 million in fines in 2016 to settle SEC accusations it failed to adequately disclose certain fixed costs in the structured notes linked to a proprietary volatility index, according to the SEC. Merrill Lynch offered and sold about $150 million of the notes to approximately 4,000 retail investor accounts in 2010 and 2011, the SEC said. In its settlement, Merrill Lynch didn’t admit or deny the accusations.
The SEC, in its statement about the award last week, credited the tipsters’ efforts to help the company involved correct the alleged misconduct and their participation in the company’s internal compliance program. SEC said the tipsters also helped the agency by identifying potential witnesses.
The SEC awarded the tipsters the maximum award percentage of 30% of the monetary penalties they imposed on Merrill Lynch, according to an SEC award letter reviewed by the Journal. The whistleblowers will each receive half of the award.
The award came after the SEC issued awards of roughly $83 million last year to three tipsters who helped the regulator reach a $415 million settlement with Bank of America.
Ex-Goldman Banker Sentenced For Insider Trading
Woojae ‘Steve’ Jung, who pleaded guilty to one count of securities fraud, received three months in prison.
A former Goldman Sachs Group Inc. investment banker who traded on confidential information regarding prospective deals has been sentenced to three months in prison and ordered to pay back $130,000 in illegal gains.
Woojae “Steve” Jung, who pleaded guilty to one count of securities fraud, was also sentenced to two years of supervised release, with six months of home confinement, and fined $30,000, according to court documents.
“We are very pleased that the judge imposed a below-guidelines sentence,” said Patrick J. Smith, an attorney for Mr. Jung. Judicial sentencing guidelines suggested a range of 1½ years to 2 years in prison.
A related civil case filed by the Securities and Exchange Commission has been stayed pending the resolution of the criminal case in Manhattan federal court.
Mr. Jung joined Goldman Sachs in 2012 and later moved to the technology, media and telecommunications group, where he worked on numerous deals and was promoted to vice president.
Starting in early 2015, he made trades using a South Korean friend’s brokerage account to conceal his involvement in the transactions and shared trading information with his younger brother, who lived in South Korea, according to court documents.
Over the course of the scheme, the authorities say, Mr. Jung traded in at least 10 companies based on inside information he obtained from his position at Goldman.
Trades in two companies—SanDisk Corp. and KLA-Tencor Corp. —accounted for the bulk of the profit, according to court documents.
Trades in SanDisk yielded $36,663 in profit and trades in KLA-Tencor yielded $64,000, court documents show.
Goldman represented SanDisk when it was acquired by Western Digital Corp. and advised KLA-Tencor when it was approached by Lam Research Corp. Lam ultimately called off the deal, citing antitrust concerns.
Mr. Jung was terminated by Goldman in 2018, following his arrest.
“Mr. Jung betrayed the trust the firm placed in him. We’re pleased he was brought to justice,” Goldman spokeswoman Maeve DuVally said. Insider Trading At Goldman, Insider Trading At Goldman