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Former Mortgage Broker Admits Using Post-Its to Facilitate Insider Trading
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Former Mortgage Broker Admits Using Post-Its to Facilitate Insider Trading

Summary: Frank Tamayo has admitted to using Post-It notes and napkins to pass stock tips as part of an insider trading scheme.

A former mortgage broker pleaded guilty on Friday in federal court in Trenton, New Jersey to securities fraud charges after he surrendered to FBI agents that morning. Frank Tamayo, 41, of Brooklyn, was accused of serving as a middleman in an insider trading ring. A clerk at a major New York law firm, as well as a broker at Morgan Stanley, were also involved in the scheme. Tamayo will be sentenced on December 23.


Steven Metro, 40, a previous clerk of Simpson Thacher & Bartlett, and Vladimir Eydelman, 42, a broker with Morgan Stanley, were charged with securities fraud in March. At the time of their charges, prosecutors would not identify the middleman involved, only disclosing that the middleman was cooperating as a witness against Metro and Eydelman.

Now that Tamayo has pleaded guilty, it could significantly affect the cases of Metro and Eydelman, both of whom have pleaded not guilty. In his plea, Tamayo admitted receiving confidential information from Metro about corporate transactions that Simpson Thacher was handling. Tamayo then admitted he gave that information to Eydelman, who used the information to make trades that ultimately yielded $5.6 million in illegal profits over five years.

The case is noteworthy not because of the money involved or the players of the crime, but because they used such an old school method to facilitate the transfer of tips—Post-Its and napkins. Metro and Tamayo would meet in different bars and restaurants in Midtown Manhattan. If Tamayo wrote a stock symbol for a company on a napkin or Post-It, it meant he had insider information on that company. Tamayo would later meet with Eydelman, who would memorize the ticker symbols. To destroy the evidence, Tamayo would swallow the napkins and notes.

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Some of the meetings were as out in the open as the information booth at Grand Central Terminal.

Tamayo, who has also been charged by the Securities and Exchange Commission with a civil suit, has agreed to forfeit $1 million and a 2008 Audi Q7. Although the maximum sentence for his crimes is 20 years, it is predicted that his sentence will be much lighter.

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