When Wall Street consultant Peter Davis left a voice mail message last Oct. 31 for a colleague of Goldman Sachs economist John Youngdahl that 30-year Treasurys were about to be discontinued, it sparked a frantic, eight-minute, $317 million buying spree at the firm that netted it a $3.8 million profit, the New York Post reports. Calling the incident "extremely embarrassing," Goldman has agreed to a $9.3 million settlement with the Securities and Exchange Commission. Davis made a similar call to MFS Investment Management, which has agreed to pay $1 million to the SEC.
The SEC has levied civil charges against Davis, Youngdahl and MFS Senior Vice President Steven Northern. Davis has pleaded guilty and settled with the SEC, but Youngdahl and Northern are fighting the charges. One of Youngdahls attorneys told The Wall Street Journal that the government did a poor job of managing its information and that the information was not labeled as confidential.
Manhattan U.S. Attorney Jim Comey said the government is investigating other firms that could have profited from the leak. On Oct. 31, Comey said, " Goldman traders began trading like there was no tomorrow. And in the case of the 30-year Treasury bond, there wasnt any tomorrow."