Goldman May Be Charged Over Bond Trading, People Say
By Vicky Stamas
Washington, March 29 (Bloomberg) -- Goldman Sachs Group Inc. has been notified that the Securities and Exchange Commission enforcement staff plans to pursue a case against the third-biggest securities firm for trading Treasury bonds based on inside information, a person familiar with the case said.
The agency began investigating Goldman after a consultant the firm had hired gave traders advance warning Oct. 31 that the U.S. Treasury Department would stop selling 30-year bonds. The $3 trillion Treasury market rallied, with the 30-year bond having its biggest one-day gain in 14 years.
The SEC notification, called a "Wells notice," is one of the last steps before the agency's staff asks the commission to discipline a securities firm by filing a civil lawsuit or administrative proceeding.
"It means the staff has reached a conclusion, subject to your persuading them otherwise, that your client ought to be charged with some violation of the federal securities laws," said John Olson, senior partner at Gibson Dunn & Crutcher in Washington.
A case against Goldman would be the first insider-trading bond case in memory, some lawyers said. "I'm not certain I can recall a single case involving bonds, but there's absolutely no reason that a case could not involve bonds," said Joel Seligman, dean of the Washington University School of Law. "It can involve any security."
Carl
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