Insider Trading: Ex-Goldman Employee to Pay $900K Fine, Former Harman VP Enters Guilty Plea, and Ex-AMO CEO Asks Judge To Stay Lawsuit

Former Goldman Employee Fined Over $900K For SEC Insider Trading Case
Former Goldman Sachs (GS) compliance worker Yeu Han will pay over $903,000 to settle allegations by the U.S. Securities and Exchange Commission accusing him of insider trading. Han was hired by the firm to develop surveillance software to help Goldman identify illegal conduct, including insider trading and market manipulation.

According to the regulator, Han was employed in the firm’s compliance division. He had access to the emails of other Goldman employees who worked on confidential acquisition and merger deals. The SEC contends that even though Han was aware that this information was privileged and nonpublic, and that he would have to get supervisory clearance and disclose his brokerage accounts to engage in any trading, in December 2014 he started trading in the securities of a number of companies before each one publicly announced acquisition and merger news. These companies included Zulily Inc., Yodlee Inc., KLA-Tencor Corp., and Rentrak Corp.

The Commission is accusing Han of making over $468K through his personal account and more than $434K through the account of a relative. Last October, Han left the United States and went to China, where he is a citizen. In November, the SEC filed the insider trading charges against him.

Ex-Harman International VP Pleads Guilty to Insider Trading
Dennis Hamilton, a former vice president of tax at Harman International Industries Inc. has pleaded guilty to insider trading. For the one count of securities fraud, the 45-year-old faces up to 20 years behind bars—although recommended federal guidelines could help him to procure a one-to-two-year prison term instead.

Hamilton engaged in insider trading in the company’s stock right before a stronger-than-expected quarterly earnings report was released. Prosecutors say that he illegally profited on 17,000 Harman shares that he purchased using his Charles Schwab (SCHW) account in one day before the company’s quarterly results were put out in 2013.

Hamilton is accused of buying the shares after seeing earlier drafts of the results, as well as a press release announcing them. He also purportedly listened to a conference call about the results.

Hamilton was arrested last month, but he is free on bond. As part of his plea deal, he will not contest the $131,958 fine representing the illegal funds he made. He is scheduled for sentencing in June.

Former AMO CEO Wants Judge to Stay Insider Trading Case
James Mazzo, the ex-CEO of Advanced Medical Optics, is asking a federal judge to consent to a stay to his insider trading case. Mazzo claims that a U.S. Supreme Court ruling expected this year could impact the charges brought against him.

Mazzo was indicted for insider trading in 2014. Prosecutors claim that he tipped close friend and former Baltimore Orioles baseball player Doug DeCinces about AMO’s $2.8B acquisition in 2009. DeCinces then allegedly passed the tip to ex-teammate Eddie Murray. Both DeCinces and Murray have settled the SEC insider trading cases against them but did not admit to wrongdoing.

Now, Mazzo is arguing that the Supreme Court’s ruling in Salman v. U.S. will impact his case. In Salman, it is up to prosecutors to prove that a defendant benefited from the insider trading alleged in order for charges to remain. In court documents, Mazzo said that pending decision will materially impact jury directions, evidentiary determinations, and other matters. Meantime, prosecutors are arguing that his motion “grossly overstates” Salman’s likely effect, disregards the Speedy Trial Act, and does not sufficiently show that to proceed with the case now would be a waste of resources.

The SSEK Partners Group is a securities fraud law firm.

Former Harman International executive pleads guilty to insider trading, Reuters, March 28, 2016

The SEC Complaint in the former Goldman employee insider trading case (PDF)

Ex-AMO CEO Mazzo wants stay in insider trading case pending Supreme Court decision, MassDevice, March 30, 2016

Salman v. US (PDF)