"Two Wall Street insiders accused of $5.6m scam" by Ben Protess | New York Times March 20, 2014
NEW YORK — Two Wall Street insiders, one a broker at a big bank and the other a clerk at a prestigious law firm, were arrested Wednesday and charged in an insider trading scheme that spanned nearly four years and involved more than a dozen corporate secrets.
Federal prosecutors in New Jersey and the Securities and Exchange Commission announced the case against Vladimir Eydelman and Steven Metro, asserting their scheme reaped about $5.6 million in illicit profits. Eydelman works at Morgan Stanley and Metro at the law firm Simpson Thacher & Bartlett.
A third participant in the scheme — an unnamed mutual friend who was described in court papers as a middleman — was not charged. Prosecutors characterized him as a “cooperating witness” in the case against Eydelman, his broker at Morgan Stanley, and Metro, an old friend from law school.
The criminal and civil complaints alleged an elaborate, if somewhat old-fashioned, scheme. It began with Metro, who is accused of gleaning secret details of corporate deals from the internal computer system at Simpson Thacher, whose clients were involved in the deals. Metro, who earned a law degree but works as a clerk rather than a lawyer, leaked the details of the deals to the middleman during covert meetings at a New York coffee shop, according to the government.
In a scene that seems ripped from a television drama, the middleman would then head to Grand Central Terminal’s signature four-faced clock, where he would relay the tips to Eydelman on a Post-it note or napkin. Eydelman — who, according to the government, used the tips to place well-timed trades on behalf of himself, family and more than 50 other brokerage customers — would watch as the middleman “chewed up and sometimes even ate the note or napkin.”
This is reading like a script. They ate the note, huh?
The case represents the latest chapter in the government’s crackdown on leaks flowing from trusted players, including lawyers and accountants, at the center of the deal-making universe.
Look at the self-internalized arrogance of the reporter.
In a 2011 case that echoes the current one, the SEC and prosecutors in New Jersey accused a lawyer of sharing corporate secrets with a trader in a scheme that netted more than $32 million.
“Law firms are sanctuaries for the confidential treatment of client information, and this scheme victimized not only a law firm but also its corporate clients and ultimately the investors in those companies,” Daniel M. Hawke, the senior SEC official who oversaw the case, said in a statement. “We are continuing to combat serial insider trading schemes, particularly by law firm employees and other professionals who are entrusted with extremely sensitive market-moving information.”
Lawyers for Eydelman and Metro could not be immediately identified, suggesting that the case appeared to come as a surprise to both men. FBI agents arrested Metro, 40, and Eydelman, 42, on Wednesday morning.
In a statement, a Morgan Stanley spokesman said: “We were just informed of the arrest this morning and will cooperate fully with the authorities as they pursue this matter. Obviously, we do not tolerate insider trading and will take appropriate action based on the facts.”
Simpson Thacher, which said it “had no knowledge” of Metro’s actions, fired him after the arrest Wednesday.
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