FINRA Lawyer Blog
On May 8, 2020, FINRA published an interesting AWC in which they suspended a quantitative research analyst for breaching internal policies relating to the treatment of confidential and proprietary information. Although FINRA will aggressively pursue Reg S-P violations, in which nonpublic confidential information pertaining to a customer — such as a social security number or account number — is improperly disclosed, this AWC is somewhat unique because FINRA charged the individual with sending himself computer code seemingly unrelated to customers of the firm.
The matter at hand concerns Sune Gaulsh, FINRA Matter No. 2018058804301, an individual who was formerly employed by Barclays Capital. According to his LinkedIn profile, Gaulsh was “part of a collaborating team within equities and research that researched and developed systematic trading strategies (volatility, global macro/CTA, L/S equity, event driven), constructed cross asset risk premia and factor portfolios, and evaluated data sets for alpha.” Although Gaulsh voluntarily resigned from Barclays, the firm filed a Form U5 disclosing an internal investigation “to determine if the registered representative sent the firm’s proprietary business information to his personal email address.”
Underlying Conduct
According to FINRA, Barclays maintained an internal policy to guard against the improper disclosure of confidential and proprietary information. Additionally, FINRA alleges that Gaulsh signed an agreement which likewise contained one or more provisions designed to protect Barclay’s confidential and proprietary information.
On March 27, 2018, in anticipation of leaving Barclay’s for another job, FINRA alleged that Gaulsh used his work email to send himself approximately 70 documents related to computer code, approximately 25 documents relating to third party vendor data and 9 documents related to indices data. FINRA claims that the dissemination of these documents “could have exposed the Firm to legal liability and had other negative consequences.”
Apparently, Barclay’s found out about Gaulsh’s conduct and chose not to fire him; instead, admonishing him not to do it again. Nonetheless, according to FINRA, within days of the admonishment Gaulsh’s conduct continued as he attempted to send himself approximately 20 additional confidential and proprietary documents in 13 separate emails. These documents mostly related to third party vendor data. Apparently, Gaulsh took steps to conceal his behavior by placing the documents “in zip archives and changing the archive file extensions in an effort to conceal the number and nature of the files being attached.” Nonetheless, Barclay’s automated email filter system detected and blocked all 13 emails from being transmitted.
Penalty Assessed by FINRA
Clearly, FINRA was troubled by the conduct described in the AWC and charged him with violating Rule 2010, which FINRA claims “applies to all business-related misconduct.” Gaulsh was suspended in all capacities for 9 months and fined $10,000.
Herskovits PLLC represents individuals and entities in regulatory investigations and disciplinary proceedings brought by FINRA, the SEC and CFTC. Feel free to contact us at 212-897-5410 for a confidential consultation.