SEC Obtains Summary Judgment In Grand Central Insider Trading Case

The SEC obtained summary judgment against Steven Metro, the key to the Grand Central insider trading ring that reputedly had $5.6 million in illicit trading profits. SEC v. Metro, Civil Action No. 3:14-cv-01742 (D.N.J.). The Court also directed that Mr. Metro pay a penalty of $25,000, although the Commission had requested a $2 million penalty in its motion papers.

Mr. Metro, a former law school graduate who worked as a clerk at Simpson Thatcher, previously pleaded guilty to one count of conspiracy and a second count of securities fraud. He was sentenced to serve 46 months in prison and pay forfeiture consisting of his available cash and certain other property. U.S. v. Metro, No. 3:15-cr-00028 (D. N.J.).

The guilty pleas were based on a scheme that traced to February 2009. At that time Mr. Metro first accessed inside information at the law firm. After obtaining the information he would meet with his law school class made, Frank Tamayo, and furnished him the information. Typically the two men met at a New York City coffee shop. During the meeting Mr. Metro would show his friend his cell phone screen on which he displayed the names and/or ticker symbols of the two companies involved and then point to the name of the acquirer. The approximate price and the announcement date were also conveyed.

Later Mr. Tamayo would meet near the information booth in Grand Central Station with Vladimir Eydelman, a broker. Mr. Tamayo would walk up to the broker, show him a post-it or napkin with the name of the company written on it and then either chew the paper up or eat it. The broker would then returned to his office and researched the company. Reports with a recommendation would be transmitted to Mr. Tamayo. The stock would be purchased and trading profits reaped. This process was repeated thirteen times before the scheme unraveled.

Program: Insights Into SEC Enforcement, is roundtable discussion of the Former Directors of the SEC’s Division of Enforcement that will be held on April 3, 2018 beginning a 4:30 p.m. at Georgetown University Law School. The program will be followed by a reception. Registration is available here without charge. The program is sponsored by the SEC Historical Society, the Federal Bar Association, and the Association of SEC Alumni.

Tagged with: , ,