About a fortnight after the United States Securities and Exchange Commission (SEC) brought insider trading charges against former Goldman compliance analyst Jose Luis Casero Sanchez, the regulator has warned the Court that the defendants in this case are dissipating assets in violation of Court orders.
Let’s recall that the lawsuit was launched on September 29, 2021. The SEC charged Sanchez, a Spanish national and former Senior Compliance Analyst who worked in the Warsaw, Poland office of Goldman, with insider trading in advance of at least 45 corporate events involving the investment bank’s clients. The SEC has obtained an emergency court order to freeze Sanchez’s assets, including certain accounts he used to place the illicit trades.
To avoid detection, Sanchez allegedly traded in multiple U.S.-based brokerage accounts held in the name of one of his parents—Jose Luis Casero Abellan and Maria Isabel Sanchez Gonzalez.
On October 12, 2021, the SEC filed a letter in the New York Southern District Court stating that the defendants are trying to liquidate and withdraw certain assets in violation of the Court’s Order.
On September 29, 2021, the Commission informed Schwab, Tastyworks, and Bitstamp that the Court had ordered any assets of the defendants to be frozen. The next day, September 30, one or more of the Defendants accessed accounts at each of those entities and attempted—in some instances, successfully—to liquidate existing positions and withdraw funds subject to the Court’s asset freeze.
In particular, on September 30, between approximately 9:12 a.m. and 11:30 a.m. ET, the Schwab brokerage account, held in Abellan’s name, was accessed, all existing positions in that account were liquidated to cash, cash withdrawal requests were initiated, and approximately $746 was withdrawn before Schwab froze the remaining assets.
Also on September 30, between approximately 9:42 a.m. and 10:07 a.m. ET, the Tastyworks brokerage account, held in Gonzalez’s name, was accessed and requests to liquidate certain existing positions in that account were initiated. However, Tastyworks prevented the trades from being executed.
That same day, at approximately 1:33 p.m. ET, the Bitstamp digital asset account, owned by Sanchez, was accessed and all existing positions in that account were liquidated to cash. The next day, October 1, all cash was withdrawn from the Bitstamp account.
The SEC warns that this recent activity in these accounts, beginning the morning after the Court’s Order freezing assets in those accounts, is evidence probative of the defendants’ knowledge of this action and their attempts to circumvent the Court’s Order.
According to the regulator, the defendants are in default of the Order. The defendants have also failed to respond to any of the Commission’s expedited discovery requests seeking additional evidence for the purposes of the preliminary injunction hearing.
And, defendants’ recent activity attempting to liquidate and dissipate or divert the assets in their frozen accounts strongly supports the continuing need for the asset freeze in order to maintain the status quo pending resolution of this case, the SEC says.
In the alternative, the Commission requests that the Court hold any hearing on the Commission’s application for a preliminary injunction telephonically.
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