The Securities and Exchange Commission has charged a former associate in Goldman Sachs’ Compliance department with insider trading using confidential information regarding pending mergers.
$450,000 in illegal profits
The watchdog said in a statement that Yue Han generated personal gains of $450,000 using information contained in emails sent and received by Goldman investment bankers advising companies preparing to merge. Han gained access to these emails while designing a surveillance software system that was to monitor employee conduct and detect possible violations such as insider trading.
Han then used this illegally obtained information to buy stock, including “out of the money” call options – options where the current market price of the security is higher than the strike price – of at least four companies about to be acquired. These included Yodlee Inc., Zulily Inc., Rentrak Corporation, and KLA-Tencor Corp.
SEC filed a complaint against Han at federal court in Manhattan and froze his assets. The Co-Chief of the SEC Enforcement Division’s Market Abuse Unit, which was responsible for the investigation against Han, said: “We allege that Han’s employer gave him access to confidential information so that he could help the firm detect and deter illegal activity, but he betrayed that trust by using the information for his own profit.” Joseph G. Sansone added that, “fortunately the SEC staff’s probing analysis uncovered Han’s suspicious trading and enabled us to obtain an asset freeze before he could dissipate his ill-gotten gains.”
