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U.S. Securities and Exchange Commission

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 48900 / December 10, 2003

INVESTMENT ADVISERS ACT OF 1940
Release No. 2199 / December 10, 2003

Admin. Proc. File No. 3-11349


In the Matter of

JOHN M. YOUNGDAHL, JR.,

Respondant.   


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ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS PURSUANT TO SECTIONS 15(b)(6), 15B(c)(4) AND 15C(c)(1)(C) OF THE SECURITIES EXCHANGE ACT OF 1934, AND SECTION 203(f) OF THE INVESTMENT ADVISERS ACT OF 1940, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS

I.

The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant Sections 15(b)(6), 15B(c)(4), and 15C(c)(1)(C) of the Securities Exchange Act of 1934 ("Exchange Act"), and Section 203(f) of the Investment Advisers Act of 1940 ("Advisers Act") against John M. Youngdahl, Jr. ("Respondent" or "Youngdahl").

II.

In anticipation of the institution of these proceedings, Youngdahl has submitted an Offer of Settlement (the "Offer"), which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission's jurisdiction over him and the subject matter of these proceedings, and the findings contained in Section III.4 below, which are admitted, Youngdahl consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Sections 15(b)(6), 15B(c)(4), and 15C(c)(1)(C) of the Securities Exchange Act of 1934, and Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions ("Order"), as set forth below.

III.

On the basis of this Order and Respondent's Offer, the Commission finds that:

1. From at least May 1983 through June 17, 2003, Youngdahl, 44, a former Vice President and Senior Economist, was associated with Goldman Sachs & Co. ("Goldman Sachs"), a registered broker-dealer, municipal securities dealer, government securities dealer, and investment adviser, at its offices located in New York, New York.

2. On September 4, 2003, the Commission filed a Complaint in the United States District Court for the Southern District of New York ("SDNY"), in an action captioned Securities and Exchange Commission v. Peter J. Davis, Jr., et al., Civil Action 03-CV-6672, charging Youngdahl with violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.1

3. The Commission's Complaint alleged that in connection with the purchase and sale of U.S. Treasury 30-year bonds, Youngdahl engaged in insider trading. The Complaint also alleged that while a Vice President and Senior Economist at Goldman Sachs, Youngdahl agreed in a series of July 2001 e-mails that Peter J. Davis, Jr. ("Davis"), a Washington, D.C.-based consultant whom Goldman Sachs hired, would attend the U.S. Treasury Department's quarterly refunding press conferences and that Davis would provide Youngdahl with embargoed information from these press conferences. The Complaint further alleged that on October 31, 2001, Davis attended the Treasury refunding press conference in which Treasury officials announced that the Treasury would suspend issuance of the 30-year bond. Treasury officials also instructed the attendees of the press conference that the information conveyed during the conference was subject to a press embargo. Davis, in violation of the refunding conference press embargo, called Youngdahl and told him that the Treasury was suspending issuance of the 30-year bonds. The Complaint alleged that Youngdahl knew that Davis was providing embargoed information on the morning of October 31, 2001. The Complaint further alleged that after receiving Davis' call on the morning of October 31, 2001, Youngdahl tipped traders on Goldman Sachs' U.S. Treasury Desk to the news about the Treasury's decision to cease issuance of the 30-year bond. While the news was still nonpublic, the traders purchased $84 million worth of 30-year bonds for Goldman Sachs' own accounts, generating profits of over $1.5 million.

4. On November 20, 2003, a Final Judgment as to Defendant John M. Youngdahl, Jr., was entered by consent against Youngdahl, permanently enjoining him from directly or indirectly violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.2

IV.

In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions specified in Respondent's Offer.

Accordingly, it is hereby ORDERED:

Pursuant to Sections 15(b)(6), 15B(c)(4), and 15C(c)(1)(C) of the Exchange Act, and Section 203(f) of the Advisers Act, Respondent be, and hereby is, barred from association with any broker, dealer, municipal securities dealer, government securities dealer, or investment adviser.

Any reapplication for association by the Respondent will be subject to the applicable laws and regulations governing the reentry process, and reentry may be conditioned upon a number of factors, including, but not limited to, the satisfaction of any or all of the following: (a) any disgorgement ordered against the Respondent, whether or not the Commission has fully or partially waived payment of such disgorgement; (b) any arbitration award related to the conduct that served as the basis for the Commission order; (c) any self-regulatory organization arbitration award to a customer, whether or not related to the conduct that served as the basis for the Commission order; and (d) any restitution order by a self-regulatory organization, whether or not related to the conduct that served as the basis for the Commission order.

For the Commission, by its Secretary, pursuant to delegated authority.

Jonathan G. Katz
Secretary


Endnotes


http://www.sec.gov/litigation/admin/34-48900.htm


Modified: 12/10/2003