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SEC Sues Former Goldman Compliance Employee for Insider Trading

Bruce Carton | November 25, 2015

The SEC announced an insider trading case today against a former Goldman Sachs employee who allegedly used his position in the Goldman compliance department to learn nonpublic information about upcoming client mergers. The SEC alleges that Yue Han, then an associate in Goldman’s compliance department, improperly used his access to information in the firm's e-mail system to make more than $450,000 in illicit profits. The SEC added that it had obtained an emergency court order freezing Han's assets and the accounts he used to place the illicit trades.
 
According to the SEC, Han's responsibilities included developing surveillance software designed to monitor investment bankers and other employees, including their emails, for potential misconduct such as insider trading. Han allegedly exploited the information he learned from these confidential e-mails to purchase securities in at least four companies, including Yodlee Inc., Zulily Inc., Rentrak Corporation, and KLA-Tencor Corp. In an email to a Reuters reporter, Han stated that the SEC's claims were "not true" and that he would have a lawyer respond to the lawsuit.
 
The SEC noted that it was able to detect Han's trading through its "Market Abuse Unit’s Analysis and Detection Center, which uses data analysis tools to detect suspicious patterns such as improbably successful trading across different securities over time." 

The Han case is the latest example of alleged insider trading by insiders at professional services firms who were not even involved in the specific case or deal in question. The SEC has brought several recent cases against law firm employees such as clerks or I.T. professionals, for example, who used their access to the firm's computer systems to learn about -- and illegally profit from -- imminent mergers.