You hate to see a peer break bad.
The Securities and Exchange Commission charged Jose Luis Casero Sanchez, a former Senior Compliance Analyst who worked in the Warsaw, Poland office of an international investment bank, with insider trading involving at least 45 corporate events with the investment bank’s clients.
Ugh. He’s giving compliance a bad name.
For an investment bank, a role of compliance is to maintain a list of restricted companies for trading because of material non-public information. It should be held tightly and lovingly. Not used to profit.
The SEC didn’t want to drag the investment bank into the litigation press releases and complaint. The press identified it as Goldman Sachs, who confirmed.
Mr. Sanchez was a Spanish national, worked in Poland and did his illegal trading in US-based brokerage accounts. The accounts were in the name of his parents. He had accounts at Schwab, Interactive Brokers and Tastyworks. I have to admit that I hadn’t heard of Tastyworks before. Apparently if I make 750 referrals to the firm I get a Tesla. (anyone? anyone?)
This is a clear case of insider trading under US law. It’s clear that Goldman had the policies in place prohibiting this kind of behavior. The kind of behavior that Mr. Sanchez was supposed to prevent or stop.
The SEC got IP logs for access to the accounts. Those logs are not always that exact. But in this case they were traced back to Poland. It doesn’t need to be more exact than that to show that Mr. Sanchez was running the accounts, not his parents.
In his first account at Interactive Brokers, the compliance people at Interactive Brokers clearly saw stuff they didn’t like. Mr. Sanchez was trading options and doing really well. I assume they flagged the account, reported it and shut it down.
Undeterred and unafraid, Mr. Sanchez moved on to Schwab and Tastyworks. He continued his options trading. I’ll assume he was taking aggressive positions. For some reason he went back to Interactive Brokers and opened a new account in his mother’s name this time. He churned through companies on the Goldman Grey List of companies being advised.
The last trade mentioned in the complaint was at Interactive Brokers in May 2021. Who wants to bet that the compliance people at Interactive Brokers flagged this account and brought it to the attention of the SEC? I’m willing to bet good money that they did the heavy lifting for the SEC of identifying bad behavior. That’s what good compliance people are supposed to do.
I’m sure the SEC did a great job of then tying the companies involved in the account’s trades back to Goldman. They got the IP addresses from the broker showing that Poland was involved. Goldman looked at the last name on the account and the employees in Poland. (How many Spaniards work at Goldman in Poland?)
Boom!
Then they checked Mr. Sanchez’s browser history and noticed Schwab and and Tastyworks (did I earn that Tesla yet?).
Boom! Boom!
They got you Mr. White.
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