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Money Stuff: Goldman Compliance Analyst Wasn’t Compliant

by
Matt Levine
Money Stuff
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Insider Trading

  • Former Goldman compliance analyst, Casero Sanchez, whose job was to help the bank prevent insider trading was himself charged with insider trading by the SEC.
  • One of his jobs was to update the firm's "Grey List," which is a confidential list of public and private entities for which the firm's private-side personnel possess nonpublic information.
    • If you're an investment banker with access to only 4-5 deals, you resort to buying short-dated options to benefit from an insider trade.
    • If you're a compliance analyst with access to all deals, you can take it slowly and make modest profits over a long period.
    • Casero was able to do the latter, making it very hard for the SEC to catch him.

Proxy Voting

  • The SEC proposed to enhance the information mutual funds, exchange-traded funds, and certain other funds report about their proxy votes.
    • This will make it easier and more efficient for investors to get crucial information about proxy votes.
    • Some say that fund shareholders might not be as interested in this information, but activists will be, as they can use this information for negative publicity of certain funds.
      • This isn't necessarily true, as many shareholders today care a lot about ESG, not just activists.

Insider Trading (2)

  • If you streamline insider trading, it could make it fairer.
    • One method is "executives can trade whenever they want, but they have to disclose their plans in advance."
    • But if advance notice news about executive trading isn't fully incorporated into the stock price, people might still get suspicious and call it insider trading.

Hamburger Habit

  • A former registered rep on Monday was ordered to pay $2.6 million in damages to his ex-wife in an arbitration claim that centered on day trading and shorting stock.
    • The ex-husband (who managed his ex-wife's money) got hooked to a hamburger chain called Habit Restaurants.
    • After Habit's stock plunged, his ex-wife's account was left with only $50,000 (originally $4.5 million).

NFT Stuff

  • A startup blockchain project called NFTfi is allowing users to mortgage their NFTs in exchange for other cryptocurrencies that can then be sold for cash.
    • Provides immediate liquidity to NFT holders who aren't yet ready to part with their NFTs.
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