U.S. enforcers accused a Goldman Sachs vice president of insider trading on Thursday. Three things jump out.
First, the sophistication with which they caught him, matching up IP addresses and phone records, and cross-checking social-media profiles.
Second, the apparent lack of sophistication with which Woojae Steve Jung allegedly used market-moving information to turn a profit. And third, the meagre $1,40,000 he may have made from the whole endeavour.
Trifling gains
It raises the question of why Mr. Jung was worth the trouble.
Mr. Jung used a brokerage account in a friend’s name to trade around a dozen companies’ securities, investigators say. The account was set up around the time Goldman forced employees to close their own accounts with non-approved brokers. The gains he made were mostly trifling: just $362 in one instance, according to the FBI agent who pursued the case.
That’s not inconsistent with other insider-trading cases, in which rich people seem to bet their reputations to win tiny amounts of money. But the crude methods outlined, allegedly placing orders within hours of accessing deal intelligence at work and repeatedly using IP addresses registered to his own name, make Jung’s case seem more Goliath-beats-David than vice versa.
Goldman might suffer embarrassment, not just because the accused was an employee but also because a world-class trading firm might be expected to have staff showing more evidence of smarts, even in their supposed misdeeds.
But the more serious issue is why the SEC and FBI would go to all the effort for such a small case.
There’s some value in the deterrent effect. But using an investigative sledgehammer to crack a tiny nut can be read two ways: either the bigger nuts have been cracked already, or the authorities just can’t find them.
(The author is a Reuters Breakingviews columnist. The opinions are his own)