Trading by members of Congress and corporations is a heavily controversial practice — one that has been pushed into the spotlight in recent years, in part by the success of House Speaker Nancy Pelosi. However, when trading, these people have to make sure they do not possess material, non-public information (MNPI). This is because trading with MNPI is a direct violation of the law.
Last week, Business Insider detailed how 66 members of Congress have violated insider trading policies set in place by the Stop Trading on Congressional Knowledge (STOCK) Act of 2012. However, these politicians will only be fined an average of $200 for their mistakes. These mistakes range from late disclosures to shifting the blame on accountants. Members of Congress revealed in the report include Sen. John Hickenlooper, Sen. Rand Paul and Rep. Madison Cawthorn.
Yesterday, however, the U.S. Securities and Exchange Commission announced separate charges for a former Goldman Sachs (NYSE:GS) vice president and former Indiana Rep. Stephen Buyer. Let’s get into the details.
Former Goldman Sachs VP, Former Congressman Charged by SEC for Insider Trading
First up, the SEC recently accused former Goldman Sachs VP Brijesh Goel siphoning MNPI from his time at the company concerning potential takeovers. The SEC alleges that Goel spoke with his friend about potential takeovers over games of squash. The friend then used his relative’s account to buy call options on the discussed companies. The SEC claims that Goel and his friend made about $280,000 from the MNPI. The illegal trades included deals concerning names like T-Mobile (NASDAQ:TMUS) and Walgreens (NASDAQ:WBA).
In a separate case, the SEC also just charged Representative Stephen Buyer with insider trading. Buyer left office in 2011, but allegedly used information he obtained as a consultant to profit illegally.
After leaving office, Buyer formed the Steve Buyer Group consulting firm, which provided services to clients like T-Mobile. In 2018, Buyer purchased 112,000 shares of Sprint stock before the company’s acquisition by T-Mobile was made public. After the acquisition became public, Buyer sold his position for a profit of around $126,000.
In 2019, Buyer also purchased 16,000 shares of Navigant, with knowledge that the company would be acquired by Guidehouse. Once the acquisition became public, Buyer sold his shares for a $223,000 profit. Buyer’s lawyer disputes the SEC’s claims, saying all of his trades were “lawful.”
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.