A 37-year-old investment banker for Goldman Sachs was arrested Thursday on charges he used inside information on mergers for which the company was a financial adviser to garner more than $130,000 on stock trades.
Woojae “Steve” Jung, 37, of San Francisco, was charged with six counts of securities fraud and one count of conspiracy, according to the U.S. Attorney’s Office in Manhattan, where Goldman is headquartered.
Goldman, which is one of the six largest U.S. banks and has policies barring employees from any improper use of confidential information, said it’s aware of the charges and is cooperating with federal investigators. Jung has been placed on leave, according to a person familiar with the matter.
Prosecutors said Jung and a co-conspirator in South Korea, who attended university together, used a brokerage account in the second person’s name to conceal the trades, which involved securities of at least 10 companies including W.R. Grace and SanDisk, and were based on what the government considers material, nonpublic information.
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They occurred from February 2015 through September 2017, authorities said. Jung worked at a Goldman office in the New York area from 2012 through 2015 before moving to the San Francisco office.
“Financial crimes, especially those that involve the exploitation of material nonpublic information of clients who have placed their trust in investment institutions, have a negative impact on the economy and individuals alike,” said FBI Assistant Director William Sweeney.
In one of the early transactions, Jung purchased call options, or bets that a stock price will rise, for W.R. Grace after working on its plan to split into two separate companies, the Securities and Exchange Commission said in a separate complaint alleging securities fraud and unjust enrichment.
He garnered profits of about $3,000 by exiting that position after Grace announced the plan in February 2015, a move that pushed its stock price up by 12 percent, the SEC said.
In October of the same year, the brokerage account Jung was using netted profits of about $40,000 from the sale of recently acquired stock and options in SanDisk in the wake of news reports on its pending takeover by Western Digital and the official announcement of the deal, the commission alleged.
The conspiracy charge filed by prosecutors carries a maximum penalty of five years in prison while the six counts of securities fraud each carry a maximum of 20 years.
