WASHINGTON – The Financial Industry Regulatory Authority (FINRA) announced today that it has barred former Goldman Sachs & Co. research analyst Brian Maguire for twice purchasing securities after he learned a fellow analyst was upgrading his recommendation in impending research reports and for lying to FINRA staff about his trading.
Jessica Hopper, Executive Vice President and Head of FINRA’s Department of Enforcement, said, “Insider trading by securities industry professionals erodes the public trust in our capital markets. FINRA utilizes sophisticated surveillance tools to detect and remediate this type of misconduct. Ensuring market integrity is one of FINRA’s core missions and weeding out misconduct from within the industry will always be a priority for FINRA.”
Federal law prohibits the purchase or sale of a security of any issuer on the basis of material nonpublic information; a person trades “on the basis” of material nonpublic information if the person making the purchase or sale was aware of the material nonpublic information at the time of the transaction. An impending research analyst upgrade may be material and is nonpublic until the research report containing the upgrade is published.
FINRA found that, in April 2020 and June 2020, Maguire purchased shares of two companies in undisclosed accounts after receiving material nonpublic information: internal emails disclosing that the research analyst covering those companies was upgrading his recommendation from “Neutral” to “Buy” in impending research reports. Maguire purchased the shares after the upgrades were approved internally but before the research reports announcing those upgrades were published.
FINRA also found that, on multiple occasions, Maguire traded the securities of issuers that he covered in contravention of firm policy prohibiting such trading, sold securities of issuers when he had a buy recommendation in his latest research report, and authored research reports without disclosing that a member of his household had a financial interest in the securities of the issuers, all in violation of FINRA Rule 2241, which governs research analyst conflicts of interest and required disclosures. Maguire did not disclose the accounts in which he traded to Goldman Sachs or seek pre-approval for the trades, as required by the firm’s procedures.
During testimony given to FINRA staff as part of its investigation, Maguire lied about his history of trading in the undisclosed accounts and trading the securities of issuers that he and his business unit covered.
In settling this matter, Maguire neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.
FINRA’s investigation was jointly conducted by the National Cause and Financial Crimes Detection Programs and the Department of Enforcement. FINRA is charged with the responsibility for conducting surveillance for potential insider trading and fraud across the U.S. equity, options, and bond markets and coordinates closely with the SEC and other federal and state regulators.
FINRA is a not-for-profit organization dedicated to investor protection and market integrity. It regulates one critical part of the securities industry—brokerage firms doing business with the public in the United States. FINRA, overseen by the SEC, writes rules, examines for and enforces compliance with FINRA rules and federal securities laws, registers broker-dealer personnel and offers them education and training, and informs the investing public. In addition, FINRA provides surveillance and other regulatory services for equities and options markets, as well as trade reporting and other industry utilities. FINRA also administers a dispute resolution forum for investors and brokerage firms and their registered employees. For more information, visit www.finra.org.