Goldman Sachs Executive Charged in Insider-Trading Scheme
Goldman Sachs VP used non-public information about deals involving a dozen customers.
(Bloomberg) -- A Goldman Sachs Group Inc. vice president gambled his career on a series of trades using inside information about the bank’s clients, including one that netted him $362, prosecutors said.
Woojae “Steve" Jung used non-public information about deals involving a dozen customers, according to records unsealed Thursday in Manhattan federal court. In total, Jung is accused of making $140,000 in illegal profits by trading through an alias brokerage account tied to a friend in South Korea.
Jung, a South Korean citizen who worked at Goldman Sachs in San Francisco, was arrested at his home there on Thursday. He appeared in federal court there and was released after posting 500,000 in bond, according to a court official. Jodi Linker, a public defender representing him, didn’t immediately respond to a request for comment.
“We are aware of the situation regarding Mr. Jung and are cooperating with legal authorities," Goldman Sachs said in an emailed statement. The firm has put Jung on leave.
The New York-based bank isn’t identified in the complaint, but Jung’s LinkedIn page says he started working at Goldman Sachs in 2012 after graduating from Wharton Business School. Jung didn’t immediately respond to a message sent through the social-media network.
Alias Account
The scam ran from 2015 to 2017, prosecutors said. Jung, 37, allegedly tried to cover his tracks by purchasing the securities in a brokerage account held in the name of a friend living in South Korea, according to a parallel suit filed by the U.S. Securities and Exchange Commission.
The trades allegedly involved companies including New York-based software maker CA Inc., the Dutch technology firm NXP Semiconductors NV and FEI Co., a supplier of scientific instruments for nanoscale applications based in Hillsboro, Oregon, according to the complaint.
Jung got inside information about business transactions involving the companies through his regular work, as well as by accessing the bank’s files and communicating with colleagues working on deals, the U.S. said. According to his LinkedIn page, Jung focused on technology, media and telecommunications sectors.
He was promoted from associate to vice president, and moved from New York to San Francisco in July 2015, according to his LinkedIn page.
Federal prosecutors listed examples of the trades that highlighted Jung’s early access to crucial insider information and the relatively small profits he made from his elaborate efforts.
$362 Profit
In one case, on March 12, 2015, Jung learned about Murray Energy Corp.’s potential acquisition of a majority stake in Foresight Energy, the U.S. said. The next day, Jung’s alias brokerage account bought 400 shares of Foresight stock. On March 15, when the deal was announced publicly, Foresight Energy shares rose 12 percent. When the shares were sold five days later, Jung allegedly reaped a profit of $362.
According to the complaint, Jung initially appeared to comply with Goldman Sachs’s internal policies by closing his Interactive Brokers LLC account when he started working at the bank and opening a bank-approved account at Fidelity Brokerage Services LLC instead. That allowed Goldman Sachs to keep track of Jung’s trading to ensure it wasn’t improper, the U.S. said.
But Jung secretly opened a new Interactive Brokers account under the name of a school friend in South Korea, the U.S. said.
Jung "left his electronic fingertips” on that account, accessing it more than 600 times and using it to make illegal trades, the U.S. said. The access logs for the account led to three of Jung’s Internet subscriber IP addresses, according to the suit.
Finally, in July 2016, an attempt was made to transfer $5,600 out of the account, according to the suit. Interactive Brokers rejected the request as improper, leading to a phone call from someone claiming to be the South Korean friend, the U.S. said. The call was placed from a mobile phone registered to Jung, according to the suit.
Jung is charged with one count of conspiracy and six counts of securities fraud. He is scheduled to appear in Manhattan federal court on June 22.
--With assistance from Joel Rosenblatt.
To contact the reporters on this story: Erik Larson in New York at elarson4@bloomberg.net;Christian Berthelsen in New York at cberthelsen1@bloomberg.net
To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Joe Schneider
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