Among recent enforcement actions by the Securities and Exchange Commission were a penalty against a company that sought to penalize whistleblowers and a bar against a former Goldman Sachs broker for misleading customers.
In addition, the Financial Industry Regulatory Authority censured and fined a firm for supervisory failures related to short-term trading of closed-end funds (CEFs).
Former Goldman Sachs Trader Barred by SEC on Fraud Charges
The former head trader in residential mortgage-backed securities (RMBS) at Goldman Sachs has agreed to be barred from the securities industry and pay $400,000 to settle charges that he repeatedly misled customers and caused them to pay higher prices.
According to the agency, Edwin Chin generated extra revenue for Goldman by concealing the prices at which the firm had bought various RMBS, then reselling them at higher prices to the buying customer with Goldman keeping the difference. On other occasions, Chin misled purchasers by suggesting he was actively negotiating a transaction between customers when he was merely selling RMBS out of Goldman’s inventory.
Chin’s misconduct began in 2010, the SEC said, and continued until he left Goldman in 2012. Without admitting or denying the findings, Chin agreed to the SEC’s determination, and to pay $200,000 in disgorgement, $50,000 in prejudgment interest and a $150,000 penalty.
The investigation is continuing.
SEC Punishes Company on Whistleblower Penalties
A California-based health insurance provider has agreed to pay a $340,000 penalty for illegally using severance agreements requiring outgoing employees to waive their ability to obtain monetary awards from the SEC’s whistleblower program.
In this latest action against a company seeking to hinder whistleblowers, the SEC said that Health Net Inc. violated federal securities laws by taking away from departing employees who wanted to receive severance payments and other post-employment benefits the ability to file applications for SEC whistleblower awards.