Insider Trading Scandal

In 2006, it was reported that an Goldman Sachs employee, Eugene Plotkin (shown below), made $6.7 million through insider trading by employing an analyst who shared with them inside deals on Wall Street, which was the first home of the New York Stock Exchange. Mr. Plotkin was sentenced to 2 years and 2 months in jail for his crime.

Another analyst accused was employeed by Merrill Lynch. Goldman Sach's insider trading scandal involved many details and even includes accusations that the employees of Goldman Sach's hired strippers to try to get investment bankers to provide stock tips and inside information on potential mergers, which of course all is information that should not be disclosed. Following the report of this insider trading occurance, the corporate scandal and the company name was all over headlines in newspapers across the U.S. The company made statements that they were cooperating with the proper authorities and a spokesperson for the company said: ''We have fully cooperated with the authorities and their investigation." This is a positive statement to make and shows that the company is taking corporate responsibility by complying with legal requirements. However, they need to do more to go beyond the legal compliance such as offering statements about their ethics that will try to get the public to trust them again. I think that they have included in their comment something like "We're sorry this disloyal incident occured, however it doesn't reflect Goldman Sachs as a whole because we pride ourselves in our ethical standards so that incidents such as this one never occurs." Because insider trading has occured many times in financial sectors of business I think the public was not very shocked that it happened at Goldman Sachs. I got the impression after researching into the incident that Goldman Sachs did not want to offer a long comment because they didn't want more attention for what happened so perhaps they were trying to take the spotlight off them by not getting so involved.

Insider trading refers "to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security," which essentially is getting information before the public gets it and acting on it, usually making a big profit. Because the insider trading scandal threatened investors and shareholder's confidence in Goldman Sachs, they needed to really work on getting back their trustworthy and loyal reputation.