A former Goldman Sachs Group Inc. investment banker begins defending himself Monday against insider-trading charges in a New York trial where his former squash buddy will be the star prosecution witness.
(Bloomberg) — A former Goldman Sachs Group Inc. investment banker begins defending himself Monday against insider-trading charges in a New York trial where his former squash buddy will be the star prosecution witness.
Brijesh Goel is charged with passing information on deals involving Goldman to Akshay Niranjan, who worked for Barclays Plc at the time. Niranjan, who allegedly made most of the money from the scheme, flipped on his longtime friend, recording their conversations and cooperating with federal investigators.
If convicted, Goel faces prison, deportation to his native India and the loss of his career. Niranjan made more than $280,000 on tips he got about potential mergers and acquisitions, according to the US, but his agreement with the government prevents him from being prosecuted. Goldman Sachs also cooperated with authorities in the case.
The Goel prosecution is one of surprisingly many cases in which finance professionals are charged with risking successful, high-paid jobs for the prospect of relatively modest, yet illegal, returns. The government says Goel’s share of the profits made from his tips was $85,000.
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At the time of he was charged in July, Goel had left Goldman and moved to a position as a principal at Apollo Global Management. His lawyer told the judge at Goel’s arraignment that his client “was shocked by his arrest.”
“That’s often the case with insider trading arrests, isn’t it?” the judge said.
Goel is charged with conspiracy and securities fraud for passing the tips and obstruction of justice for allegedly deleting messages with Niranjan.
‘We Need to Delete’
“F—-… This we need to delete,” Goel allegedly said in a conversation recorded by Niranjan. “Did we put on any trade?… It has to be deleted. I don’t even have this chat.”
The securities fraud and obstruction charges carry maximum sentences of 20 years in prison, though Goel would likely be sentenced to much less.
The trial will focus on the relationship between two young men from India who came to Wall Street to make their names. Goel and Niranjan met in 2012 at University of California, Berkeley’s Haas School of Business, where they both pursued master’s degrees in quant-oriented financial engineering.
At Haas, Goel and Niranjan were avid poker players, though that was hardly unusual among MFE students. Instructors at Haas encouraged poker games because they forced students to measure risk and evaluate outcomes quickly, with money on the line. The stakes were low, with antes ranging from $5 to $20, because the students were on tight budgets.
According to federal prosecutors in Manhattan, Goel and Niranjan would start taking much bigger risks with money on the line less than four years after their 2013 graduation.
Wall Street Jobs
After Haas, Goel landed a job at Goldman, where he rose to vice president at the bank’s Firmwide Capital Committee, while Niranjan’s career took him to Barclays, where he became a foreign-exchange trader.
Prosecutors allege Goel passed along information from the bank’s Firmwide Capital Committee, based on confidential emails that contained details and analysis of mergers the bank was considering financing or deals in which it was acting as a financial adviser.
Starting in 2017, Goel shared tips with Niranjan about pending deals moving through Goldman’s pipeline, according to prosecutors. Goel allegedly passed along these tips to his buddy in person, sometimes while playing squash. Prosecutors claim the two men sometimes used squash as a cover for passing illicit tips.
It’s expected jurors will hear a portion of recorded conversations between the two men, who sometimes spoke in Hindi.
Prosecutors claim Goel told his friend about Goldman’s plans to provide financing to EQT AB’s potential acquisition of Lumos Networks Corp.
Coded Messages
“Did you book the court?” Goel allegedly texted his friend the next day. Prosecutors claim this was a coded message inquiring whether Niranjan had followed up on a plan to purchase Lumos call options. Niranjan allegedly had, using his brother’s brokerage account.
Niranjan then purchased call options in the company about to be acquired, in the name of a relative. The first few trades generated modest returns, but an investment in Calgon Carbon Corp., which agreed to be acquired by Kuraray Co. LTD, led to a $233,360 score, according to the government.
Prosecutors claim that, in addition to Calgon, Goel passed Niranjan information about other potential target companies, including Sprint Corp., Patheon NV, PharMerica Corp. and Chicago Bridge & Iron NV.
The case began with jury selection Monday and is expected to take at least one week.
The case is US v. Goel, 22-cr-00396, US District Court, Southern District of New York (Manhattan)
–With assistance from Chris Dolmetsch.
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