New York (HedgeCo.Net) – A stockbroker and a managing clerk at a hedge fund law firm have been charged with insider trading and making illicit profits of $5.6 million during a four-year period, Reuters reports.
Vladimir Eydelman and Steven Metro were linked through a mutual friend who acted as a middleman in the illegal trading scheme, the SEC says.
Metro obtained nonpublic information, then tipped the middleman during meetings at a New York City coffee shop. The unnamed middleman, according to the SEC, would then meet up with Eydelman, who was a registered representative at Oppenheimer and is now at Morgan Stanley, showing him a post-it note or napkin with the relevant ticker symbol. The middleman is reported to have “chewed up and sometimes even ate the note or napkin” afterwards.
In a parallel action, the U.S. Attorney’s Office for the District of New Jersey today announced criminal charges against Metro, who lives in Katonah, N.Y., and Eydelman, who lives in Colts Neck, N.J.
“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,” said Daniel M. Hawke, chief of the SEC Enforcement Division’s Market Abuse Unit. “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.”
According to the SEC’s complaint, Eydelman also traded on inside information in the accounts of more than 50 of his brokerage customers. 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.
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