Goldman Sachs settles bond dispute

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The Independent Online

Federal regulators in the United States last night announced a settlement worth $10.3m (£6.5m) with Goldman Sachs and a financial consultant for the bank, Pete Davis, arising from the improper trading of 30-year Treasury bonds two years ago just before news that they were to be phased out by the US government.

Prosecutors, meanwhile, said they were filing related charges, ranging from conspiracy to insider trading and perjury, against a former senior economist with Goldman Sachs, John Youngdahl, and an executive with the mutual fund company MSF Investment Management, Steve Northern.

The case followed an investigation by the Securities and Exchange Commission and the US Justice Department. Mr Youngdahl, who no longer works at Goldman Sachs, and Mr Northern were contesting the charges against them, which included insider trading and perjury.

The violation occurred in October 2001 when Mr Davis reportedly attended a media briefing at the Treasury informing reporters of the plan to retire the so-called "long bonds". Although the information was embargoed, he allegedly telephoned clients with the news, including Mr Youngdahl at Goldman Sachs and Mr Northern at MSF. Traders at Goldman allegedly then traded in the bonds to earn a quick profit for the bank.