INSIDER TRADING: ANOTHER GUILTY PLEA
Insider trading continues to be a key enforcement priority for prosecutors, as well as the SEC. Earlier this week, Michael Koulouroudis, who received inside tips from former UBS Director of Mergers and Acquisitions Nicos Stephanou, pleaded guilty to one count of conspiracy to commit securities fraud and one count of securities fraud. The charges were based on an insider trading scheme which centered on information obtained by Mr. Stephanou through his employment at UBS in London. U.S. v. Koulouroudis, Case No. 1:09-mj-00287 (S.D.N.Y. Filed April 30, 2009).
According to the court papers, Mr. Koulouroudis, a close friend of Mr. Stephanou, received inside information from 2005 through 2008 about transactions involving International Steel Group, Albertson’s and Elk Corporation. In each instance, Mr. Koulouroudis traded in the securities of the company based on the information he received. As a result of these traded Mr. Koulouroudis made at least $270,000 in illegal trading profits according to the indictment.
Previously, criminal charges were also brought against Mr. Stephanou. U.S, v. Stephanou, Case No. 1:08-mj-02825 (S.D.N.Y. Filed May 6, 2009). In that case Mr. Stephanou pleaded guilty to seven felony charges including six counts of conspiracy to commit securities fraud and one count of securities fraud. His co-defendant, George Paparrizos, pleaded guilty to one count of conspiracy to commit securities fraud and one count of securities fraud on August 7, 2009. U.S. v. Paparrizos, Case No. 1:09-mj-00288 (S.D.N.Y. Filed April 21, 2009).
The initial case against this insider trading ring was brought by the Commission. SEC v. Stephanou, Case No. 09 CV 325 (S.D.N.Y. Filed Feb. 5, 2009), discussed here. See also Lit. Rel. 20884 (Feb. 5, 2009). The SEC settled with Messrs. Stephanou and Paparrizos on November 6, 2009. In that settlement each defendant consented to the entry of a permanent injunction prohibiting future violations of the antifraud provisions of the Securities Act and the Exchange Act. Mr. Stephanou also agreed to pay disgorgement of over $460,000, along with prejudgment interest and to the entry of an order in a related administrative proceeding barring him from associating with any broker or dealer. Mr. Paparrizos agreed to pay disgorgement of about $24,000 along with prejudgment interest and a civil penalty equal to the amount of the disgorgement. See also Lit. Rel. 21285 (Nov. 6, 2009).