Lee W. Walker, a fixed income trader with Goldman Sachs International, was permanently barred from association with the Financial Industry Regulatory Association in any capacity based upon a finding that Walker mislead his firm regarding an investigation into unlawful trading. Department of Enforcement v. Lee W. Walker, No. 2013038196601 (May 4, 2015).

According to the Decision, FINRA’s Department Enforcement had filed a complaint on December 4, 2014, alleging Walker took action in May-June of 2013 in order to mislead his former firm regarding two of the securities in Walker’s trading book. The Default Decision came from Walker’s failure to answer the complaint.

The Decision indicated that FINRA launched their investigation after Goldman Sachs, in September 2013, reported on a Form U4 that Walker was terminated given concerns about Walker’s conduct during a quarter end price verification and a particular bond trade.

The Decision indicated that in March, 2013, his firm’s controllers had found a variance between the firm’s internal prices and an external provider’s prices for a credit default swap index in the trading book Walker used. FINRA found that Walker not only lied to his firm by claiming that pricing he obtained was independent when it was not, but he had also colluded with another one of the firm’s traders to provide the firm with information that the individuals knew was not independent. FINRA deemed Walker’s conduct in this regard to be in violation of Rule 2010.

The Decision further stated that in June, 2013, Walker had entered a trade in error involving Ukraine Eurobonds. When his firm’s staff questioned him about it, Walker had falsely indicated that the trade was genuine. Walker was alleged to have misled his firm regarding a trade arrangement that followed, in which he purchased back a Eurobond position at the same price, quantity, and counterparty. The Decision indicated that Walker, after being probed, changed his explanation to admit the error which was determined to have created a trading variance of $1.5 million in Walker’s trading book. Walker admitted that he executed trades with a colleague’s firm rather than cancel the aforementioned trade as his firm’s procedures would have required. FINRA deemed Walker to have violated FINRA Rule 2010 in consideration of falsely representing the erroneous trade of Eurobonds was genuine and then arranging with his colleague’s firm to sell such bonds at a certain price in order to repurchase the bonds at the same price.

Firms and individuals are prohibited from engaging in conduct like Walker’s, which FINRA associated most closely with forgery and falsification of documents. FINRA found that Walker’s conduct of knowingly misleading his firm while engaging in collusion with other firms’ traders to mislead his firm regarding the aforementioned securities, was egregious enough to warrant barring Walker permanently.

Guiliano Law Group

If you have been the victim of securities fraud and you have a complaint, you should consult with an attorney. The practice of Nicholas J. Guiliano, Esquire, and The Guiliano Law Group, P.C., is limited to the representation of investors in claims for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.

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