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Former Goldman Vice President Pleads Guilty To Insider Trading

Published: December 19, 2018
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Source: ZeroHedge

A former Goldman Sachs Vice President pleaded guilty on Wednesday to insider trading, after prosecutors alleged that he made over $130,000 in illegal profits.

From 2015 through 2017, Woojae "Steve" Jung used his access to material non-public information on Goldman clients' potential parties to mergers, acquisitions and corproate restructurings to trade through an account established in the name of an associate living in South Korea.

Jung, a South Korean citizen who joined the Investment Bank in July 2012 after graduating from Wharton business school, opened a trading account with Goldman when he joined the firm per company policies. The next month, an account was opened for Jung's friend - described as a student residing in Los Angeles. Investigators traced the IP addresses used to make the trades to Jung's Manhattan residence and computers in Korea.

In 2015, Jung was promoted to Vice President and moved from New York to Goldman's San Francisco offices. He was put on leave following his indictment and left the firm in June, according to FINRA records. Jung was hit with seven counts; one count of conspiracy to commit securities fraud and six counts of securities fraud.

In one case, Jung made $57,266 on SanDisk shares and options surrounding a rumor that Western Digital might acquire the chipmaker. Jung also netted approximately $64,000 on the October 2015 acquisition of KLA-Tencor by Lam Research.

Not all of Jung's insider trading was spectacularly profitable; in March 2015 Jung bought 400 shares of Foresight Energy right before Murray Energy Corporation took a majority stake, resulting in a profit of just $362.00.

Magistrate Judge Deborah Freeman of the Southern District of New York recommended that Judge Lewis Kaplan accept Jung's guilty plea. The former banker faces 18 to 24 months in prison under federal sentencing guidelines.

Read the indictment against Jung here.

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In an unprecedented move that possibly foreshadows similar charges from the US DOJ - and lots of headaches for the "recently retired" Lloyd Blankfein - the Malaysian attorney general has filed criminal charges against Goldman Sachs - targeting two of the investment bank's Asian subsidiaries and two former Goldman bankers who have already been charged by the US (former Southeast Asia head Tim Leissner and banker Roger Ng), accusing the investment bank of violating the country's securities laws by lying in bond agreements for three deals that raised $6.5 billion for 1MDB, a Malaysian sovereign wealth fund formed under former Prime Minister Najib Razak that US authorities believe was looted for upwards of $4 billion by corrupt bankers and officials.

Even by Wall Street standards of gouging customers this was one hell of a skim. In 2012 and 2013, the Malaysian government was raising $6.5bn (£5bn) from investors to establish a sovereign wealth fund and finance various domestic infrastructure investment projects. And the cut for Goldman Sachs – the most prestigious investment bank in the world – for arranging the fundraising from the global capital markets? Ten per cent, or $600m.

A former assistant to Goldman Sachs CEO John Solomon committed suicide on Tuesday, the day he was expected to plead guilty in federal court to stealing more than $1 million of rare wine from his former boss, according to Bloomberg.

Goldman Sachs CEO Lloyd Blankfein famously said in 2009 at the height of the financial crisis that he was “doing God’s work.” What Goldman Sachs was actually doing in secret at that time was receiving billions of dollars in undisclosed loans from the Federal Reserve – often at the insanely low interest rate of .01 percent.

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