You are here
Please excuse the erroneous transmission
New York, Nov. 12 (Bloomberg) -- Goldman Sachs Group Inc.
says it was one of several companies given an early tip
about the U.S. Treasury Department's decision to stop
selling 30-year bonds,raising the likelihood that the
information was more widely known than had been thought,
the Wall Street Journal reported, citing unidentified
people familiar with the matter.
The information may have helped the securities firm plan its
trading strategy ahead of the official announcement on Oct. 31,
the paper said. It isn't known whether Goldman made any profit
because of the tip, nor is it clear that any securities laws
were violated, the paper said.
Goldman believes it hasn't engaged in any wrongful behavior
and will assist authorities with any review they might conduct,
the Journal reported, citing a company statement.
Pete Davis, an industry consultant, attended an Oct. 31
Treasury press briefing where the news was announced and
disclosed the embargoed information to his clients; Goldman
is one of Davis's clients and contacted the Securities and
Exchange Commission and the Treasury Department to discuss
the matter, the paper said.
The SEC has said it will investigate the premature disclosure
of the Treasury Department's decision to stop issuing the
30-year bond. As well as Davis's tip to clients, the Treasury
press office posted a news release on its Web site at least 10
The price of the 30-year bond jumped in the half-hour before
the Treasury announced it would no longer sell the security,
raising questions about possible breaches of insider-trading
Daily trading in the Treasury market dwarfs the stock market,
with more than $300 billion of average daily trades in a recent
week, compared with about $75 billion for the New York Stock
Exchange and Nasdaq Stock Market.
A trader with advance knowledge of the Treasury's decision
would have had an advantage on a day when bonds posted their
biggest move since the October 1987 stock market crash. The
5 3/8 percent Treasury bond maturing in 2031 gained 5 5/32
points, pushing down its yield 33 basis points to 4.87 percent.
While Goldman is the biggest firm to acknowledge receiving
the tip, other firms could yet be caught up in the fallout, the
paper said, citing industry experts. The SEC has confirmed that
it is investigating several bond-trading firms. The identities of
the other firms aren't known, nor is it clear whether they traded
on the information, the Journal said.