US securities regulators have filed charges against a former Goldman Sachs information technology employee who allegedly made more than US$460,000 in illegal insider trades before fleeing to China, officials announced on Wednesday.
Yue Han (韓悅), 30, pocketed the money after trading stock options on four companies advised by Goldman investment bankers on impending buyout offers, according to charges filed on Tuesday by the US Securities and Exchange Commission (SEC).
Shares of the four companies — Yodlee Inc, Zulily Inc, Rentrak Corp and KLA-Tencor Corp — jumped when takeovers were announced.
Han gained access to bankers’ e-mail accounts because his job entailed developing surveillance software designed to monitor other employees for misconduct such as insider trading.
Han, a Chinese national, worked at Goldman from December last year to last month. He left New York City on Oct. 22 for Shanghai, where he is believed to reside, the SEC 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,” said Joseph Sansone, co-chief of the SEC enforcement division’s market abuse unit.
The SEC said it had obtained a federal court order freezing assets linked to Han.
Separately, 12 of the biggest players in interest-rate swap trading were sued for allegedly conspiring to block fund managers from entering the exchange market.
The antitrust complaint filed in New York federal court by a public pension fund names most of the biggest US and European investment banks among the defendants as well as trading platforms ICAP Capital Markets LLC and Tradeweb Markets LLC.
Big banks have been accused of colluding in other areas of trading such as interbank rates, currencies and credit default swaps.
Financial institutions have paid billions of US dollars to settle some of the cases brought by investors and governments.
In their role as interest rate swap market makers, the banks have prevented buy-side investors from trading the swaps on exchanges, according to the complaint.
The total notional value of outstanding interest-rate swaps was about US$320 trillion in the first half of this year, according to a report this month by the Bank for International Settlements.
Buy-side investors are trapped in the lenders’ “inefficient and antiquated” over-the-counter market and blocked from transparent, competitive pricing and faster trades so the dealers can preserve “an extraordinary profit center,” according to the complaint.
This has allowed the dealers to “extract billions of [US] dollars in monopoly rents, year after year,” the Chicago school teachers’ pension fund alleged in the complaint.
The fund seeks class-action status and triple damages, as allowed under US federal law.
The swaps, a type of financial derivative that can swing in value when central banks raise or lower interest rates, help pension funds, companies and municipalities manage risk and insulate themselves from changes in monetary policy.
The big banks include Defendants Bank of America Corp, Citigroup Inc, Goldman Sachs Group Inc, UBS Group AG, Barclays PLC, Credit Suisse Group AG and Deutsche Bank AG.
Additional reporting by Bloomberg
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