WASHINGTON (CN) – The SEC on Wednesday charged a former Goldman Sachs trader, and his father, with inside trading. Spencer Mindlin and his father Arthur are accused of trading on information Spencer learned while working on Goldman Sachs’ exchange-traded funds desk.
The SEC said it was the first enforcement action it has brought involving inside trading on exchange-traded funds.
The Mindlins are accused of making $57,000 in ill-gotten gains, through four deals based on the inside information.
“While working on Goldman’s Exchange-Traded Funds Desk (‘ETF Desk’), Spencer Mindlin obtained material nonpublic information concerning Goldman’s plans to purchase and sell large amounts of securities underlying an exchange-traded fund (‘ETF’), the SPDR S&P Retail ETF (‘XRT’),” the SEC said in its complaint. “Spencer and Alfred Mindlin then traded in these securities ahead of Goldman. Prior to Goldman placing large buy orders in securities underlying the XRT (‘XRT underliers’), Spencer and Alfred Mindlin took long positions in those same securities. When Goldman placed large sell orders in XRT underliers, Spencer and Alfred Mindlin took short positions in those same securities.
“Specifically, on four occasions, in December 2007 and March 2008, Spencer Mindlin and Alfred Mindlin traded XRT underliers with knowledge of Goldman’s trading intentions, reaping illicit profits in excess of $57,000. Spencer Mindlin learned of Goldman’s trading intentions through e-mail communications shortly before he and Alfred Mindlin placed their trades in XRT underliers.”
Spencer, 33, of New York, N.Y., resigned from Goldman Sachs in August 2009. His father, 68, is a CPA who lives in Massapequa, N.Y., and Delray Beach, Fla.