WASHINGTON (Reuters) - A former Goldman Sachs employee (GS.N) and his father were charged by U.S. regulators with insider trading related to confidential information about trading strategies for exchange-traded funds.
The U.S. Securities and Exchange Commission said it was the first time it had brought an insider-trading enforcement action involving ETFs. The case is the latest move by the commission in its aggressive effort to crack down on insider trading on Wall Street.
In a civil complaint, the SEC said on Wednesday that Spencer Mindlin, who worked on Goldman’s ETF desk from September 2007 until his resignation in August 2009, and his father, Alfred Mindlin, made at least $57,000 in illicit trading profits.
An attorney for the Mindlins was not immediately available for comment.
The commission said that through his work at Goldman, New York resident Spencer Mindlin, 33, was able to get nonpublic information about Goldman’s plans to buy and sell securities underlying the SPDR S&P Retail Exchange-Traded Fund (XRT), which replicate the performance of the Standard & Poor’s Retail Select Industry Index .SPSIRE.
The SEC said he then tipped off his father, 68, a certified public accountant who resides in Massapequa, New York and Delray Beach, Florida. Together, the SEC alleges, the father and son traded illegally in four different securities that underlie the ETF.
The insider trading allegedly occurred in December 2007 and March 2008. At the time, the SEC said that Goldman was the largest institutional holder of the XRT so that its customers could short it. Goldman also shorted the various securities underlying the ETF in order to hedge its long position.
The agency claims Spencer Mindlin knew all about Goldman’s hedging strategy, and that he and his father began buying and selling securities underlying the ETF. Their trades were allegedly made in a brokerage account under a family member’s name, and he did not disclose them to his employer.
Reporting by Sarah N. Lynch; Editing by Phil Berlowitz