SEC Accuses former Goldman Sachs Employee of Insider Trading (GS)

The U.S. Securities and Exchange Commission (SEC) has accused a former Goldman Sachs (NYSE: GS) employee and his father of insider trading. The SEC has alleged that Spencer D. Mindlin, who worked with Goldman Sachs between 2001 and 2009, provided confidential information gained while working at the bank’s ETF trading desk to his father Alfred Mindlin. The two have allegedly made $57,000 from trading on inside information.

The charges from the SEC come at a time when exchange traded funds are facing increasing scrutiny. Last week, in an unrelated case, Swiss bank UBS AG (NYSE: UBS) disclosed a $2.3 billion loss due to unauthorized trading by a rouge employee working on the bank’s ETF trading desk.

The SEC has accused the father and son duo of trading illegally in four different securities underlying the SPDR S&P Retail ETF (XRT) between December 2007 and March 2008.  The illegal trades started three months after Spencer Mindlin joined the ETF trading desk at Goldman. The alleged trades were in a combination of options and shares.

The SEC has accused Mindlin of passing along confidential information about Goldman Sachs’ non-public holdings in XRT and its plans to trade large amounts of securities underlying the XRT to hedge its position.

Sanjay Wadhwa, associate director of the SEC’s New York regional office, said that the agency is aggressively working to identify and prosecute illegal insider trading across multiple markets and derivative products regardless of the complexity of the trading pattern.

A lawyer representing the Mindlins, meanwhile, has said that they did nothing wrong and the allegations should not have been bought against them.

A spokesperson for Goldman Sachs said in an emailed statement that the bank would fully cooperate with the SEC’s investigation.

The case has once again highlighted compliance issues at big banks.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.