Enter your email address and start getting breaking law firm and legal news right now!
|1,000,000 + Attorneys and Legal Staff - Legal employers hire more people on LawCrossing than any other site.|
Simpson Thacher Managing Clerk Charged in Insider Trading Scheme
The U.S. Securities and Exchange Commission has charged a stockbroker working at Morgan Stanley, and a law firm managing clerk working at Simpson Thacher over insider trading around more than a dozen mergers and other corporate transactions. During a four-year period they made illicit profits of $5.6 million.
In a parallel action the U.S. Attorney’s Office for the District of New Jersey has announced criminal charges against Steven Metro, the managing clerk at Simpson Thacher & Bartlett LLP in New York. Metro used to steal confidential data from the law firm and pass it on to the stockbroker Vladimir Eydelman through a mutual acquaintance.
Daniel M. Hawke, chief of the SEC Enforcement Division’s Market Abuse Unit said, “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.”
According to the SEC, the insider trading scheme started in early February 2009, when Metro met the middleman and other friends for a drink at a bar in New York City. The relationship started with the middleman expressing concern to Metro about his holdings in Sirius XM Radio. Metro told him not to worry because he knew that Liberty Media Corp. planned to invest more than $500 million in Sirius, and the law firm where he worked was handling the work. Based on the information divulged by Metro, the middleman called up Eydelman and told him to buy additional shares of Sirius, which at the time was expected to go bankrupt.
When Eydelman expressed his concerns about buying Sirius’s stock, the middleman assured him that he had a source who worked at a law firm. When the deal was publicly announced, Eydelman noted that Simpson Thacher had acted as legal counsel to Sirius. From then on the trio set up a routine according to which Metro would regularly pass on confidential information to Eydelman through the middleman, and he would receive money for the tips he gave in his brokerage account for further investment.
According to the SEC’s complaint, Eydelman also traded on inside information in the accounts of more than 50 of his brokerage customers. He earned significant commissions as consequence of this trading, and received bonuses from his employers based on his performance driven in large part by the insider trading scheme.
The middleman’s agreement with Metro resulted in more than $168,000 being apportioned to Metro as his share of profits from the insider trading scheme in addition to his profits from personally trading in advance of at least two transactions.Simpson Thacher Managing Clerk Charged in Insider Trading Scheme by Scott