A former Goldman Sachs & Co. economist was sentenced Friday to nearly three years in prison for passing along an inside tip that gave the firm an edge on the bond market and millions of dollars in tainted profits.
John Youngdahl, 44, of Summit, N.J., pleaded guilty to securities fraud and wire fraud in federal court in November. He had already agreed to pay $240,000 to settle related charges by the Securities and Exchange Commission. He was sentenced Friday in Manhattan federal court to two years and nine months in prison.
The government announced Oct. 31, 2001, that it was ending sales of its benchmark 30-year Treasury bond. Officials set a strict 10 a.m. embargo, meaning no one could publicize the information until then.
But at 9:35 a.m., a consultant hired by Goldman who had attended the Treasury news conference passed the information to Youngdahl, who relayed it to a Goldman trader.
A Treasury Department employee inadvertently posted the announcement online at 9:43 a.m., eight minutes later. The news triggered the largest single-day rally in the long-term bond since the stock crash of October 1987.
The government said Goldman made $3.8 million on its eight-minute advantage. The firm has since agreed to pay $9.3 million to settle SEC charges related to the illegal bond trading.
The consultant, Peter Davis, has already pleaded guilty to securities fraud, wire fraud and conspiracy and is awaiting sentencing.