Goldman VP Nabbed for Insider Trading; More Challenges for Deutsche

By Yacik, George | American Banker, June 4, 2018 | Go to article overview

Goldman VP Nabbed for Insider Trading; More Challenges for Deutsche


Yacik, George, American Banker


Byline: George Yacik

Receiving Wide Coverage ...

Risky business: The proposed changes to the Volcker rule will allow banks to take on more trading risk -- but not dangerously so. "Volcker 2.0 gives banks more flexibility to take advantage of the shifting landscape," which includes "a new wave of global market volatility," the Wall Street Journal says. "Bank managers may be just a bit more likely than before to clear an aggressive market-making trade. This increased liquidity provision will make the overall market run smoother, though hopefully without banks taking on too much risk."

The Financial Times says the "big Wall Street banks will be given a chance to rebuild their trading arsenals under a softened version of the Volcker rule on risk-taking, but they are expected to stop short of the kind of buccaneering bets they routinely made a decade ago."

Busted: Federal regulators arrested and charged a banker at Goldman Sachs with insider trading. The Securities and Exchange Commission said Woojae "Steve" Jung, a Goldman vice president, earned about $140,000 by making illegal trades through a friend's brokerage account in South Korea using information about mergers he learned about at work. The trades, involving at least 12 companies, took place between 2015 and 2017.

The U.S. Attorney's office in New York charged Jung with six counts of securities fraud and one count of conspiracy to commit fraud. Wall Street Journal, Financial Times, New York Times

Trouble ahead, trouble behind: Deutsche Bank, whose American unit has been deemed "troubled" by the Federal Reserve and a "problem bank" by the Federal Deposit Insurance Corp., faces even more hurdles in the coming months. Next month, it must go through the Fed's annual stress tests. And by July 1 it must present its "living will" plan showing regulators how it would wind itself down in a bankruptcy-type scenario. "These plans can be difficult to get right, particularly for banks with shoddy controls," according to the New York Times.

S&P downgraded Deutsche Bank's credit rating to BBB-plus from A-minus, citing "a deeper restructuring" than previously expected, which carried "non-negligible execution risks." "The bank appears set for a period of sustained underperformance compared with peers, many of whom have now finished restructuring," the rating agency said.

Rather than watching Italian banks, investors should be keeping an eye on "the eurozone's most systemically important bank," which has been "flashing red," the FT says. …

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