Former Goldman trader barred from industry after SEC probe

A former trader for Goldman Sachs has been banned from the financial industry and will pay a $400,000 fine after regulators found he misled customers about the prices of some securities.

The Securities and Exchange Commission (SEC) announced Tuesday that Edwin Chin, who once headed trading in residential mortgage-backed securities at Goldman, would pay the fine and accept the ban after their probe found evidence of his wrongdoing.

{mosads}Specifically, the SEC determined that from 2010 to 2012, Chin would hide the prices Goldman had paid for some securities and then in turn sell those securities to clients at a higher price, with Goldman pocketing the difference.

Other times, the SEC said Chin would lead clients to believe he was actively negotiating trades with other customers on a particular security, when in reality he was simply selling out of existing securities Goldman already had on its books.

“Investors purchasing these securities rely on dealers to be honest about the purchase price they paid,” said Michael J. Osnato, chief of the SEC Enforcement Division’s Complex Financial Instruments Unit.  “Chin repeatedly abused his fundamental duty to serve as an honest transmitter of market information so he could increase Goldman’s trading profits and, indirectly, his own compensation.”

Chin agreed to the fine and the ban from the securities industry without admitting or denying the SEC’s findings.