Goldman Sachs VP Woojae "Steve" Jung accused in insider trading conspiracy

Kevin McCoy | USA TODAY

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NEW YORK — A Goldman Sachs vice president allegedly netted more than $140,000 in illegal profits through insider trading in stocks of 12 companies before pending corporate deals became public.

Woojae (Steve) Jung, 37, was accused Thursday of conspiracy and securities fraud charges in a criminal complaint unsealed by federal prosecutors in the Southern District of New York. The Securities and Exchange Commission filed similar civil allegations against Jung.

The criminal filing identified Jung as a vice president of a "prominent investment bank" but did not name his employer. However, Financial Industry Regulatory Authority broker records show that Jung since 2012 has worked for Goldman Sachs, a global banking and financial giant based in New York City.

"We are aware of the situation regarding Mr. Jung and are cooperating with legal authorities in the matter," said Michael DuVally, a Goldman Sachs spokesman.

Jung, a Korean citizen who lives in San Francisco, allegedly tried to hide his connection to the illicit trading by purchasing the securities through the brokerage account of a friend who lives in South Korea, the criminal complaint alleged.

The complaint named the friend, Sungrok Hwang, as a relief defendant — someone who allegedly has received financial gains through illegal actions committed by others.

"Jung tried to insulate himself by allegedly placing trades in the brokerage account of a friend who lived overseas," Joseph Sanson, chief of the SEC's Market Abuse Unit, said in an announcement of the charges. "Like others before him, Jung's alleged scheme failed when our data analysis uncovered the account's suspicious trading pattern, and, despite Jung's attempts at evasion, traced the trading back to him."

The alleged scheme began around February 2015 and continued at least until July 2017, federal investigators charged.

As a Goldman Sachs executive, Jung had access to nonpublic information about impending business transactions involving companies that were advised by the bank.

Federal investigators allege he used the secret information to generate profits by buying and selling shares or options for firms that receiving financial advice from Goldman Sachs. They include: W.R. Grace; Foresight Energy; SanDisk; KLA-Tencor; Fairchild Semiconductor; FEI; NXP Semiconductors; Microsemi; Nimble Storage; Gigamon; CA, and WebMD Health.

Investigators linked Jung to the alleged illegal transactions by tracking the electronic activity of Internet Protocol addresses registered to him, the court filings show.

Details of the W.R. Grace transaction in the court filing illustrated the alleged pattern of insider trading.

During late 2014, the Maryland-based chemical conglomerate was being advised by Goldman Sachs while in secret discussions to separate into two independent, publicly-traded companies.

Jung electronically accessed Goldman Sachs files about the planned separation in early February 2015, the SEC complaint alleged. On Feb. 4 Jung allegedly bought W.R. Grace call options set to expire on March 20. The options represented a financial bet that the company's share price would rise.

W.R. Grace publicly disclosed its separation plan on Feb. 5. The announcement sent the company stock price up roughly 12%.

After the announcement, Jung allegedly sold the call option position for roughly $3,000 in profits, the SEC complaint alleged.

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