A former head trader in residential mortgage-backed securities (RMBS) for Goldman Sachs has been fined $400,000 for misleading clients on prices.
From 2010 until he left the firm in 2012, Edwin Chin was caught out concealing the prices Goldman Sachs had bought in various RMBS, and then charging clients a higher price.
The Securities and Exchange Commission (SEC) said Chin had also misled clients “by suggesting he was actively negotiating a transaction between customers when he was merely selling RMBS out of Goldman’s inventory.”
The former head trader has been barred from working in the securities industry, and agreed to pay the fines.
Discussing the case, chief of the SEC enforcement division’s complex financial instruments unit, Michael Osnato, said Chin had “abused his fundamental duty.”
He added: “With no public exchange showing the price for each RMBS trade as it occurs, investors purchasing these securities rely on dealers to be honest about the purchase price they paid.”