Tipper in Serial Insider Trading Ring Indicted
Criminal insider trading charges were filed against the former managing clerk of Simpson Thacher & Bartlett, Steven Metro. U.S. v. Metro (D. N.J. Jan. 15, 2015). Mr. Metro was indicted by a grand jury on one count of conspiracy to commit securities fraud, one count of securities fraud and one count of tender offer fraud.
The charges against Mr. Metro trace to 2009 when he began using his position to acquire information on pending deals regarding Simpson clients. As a managing clerk Mr. Metro did not typically work on deals. Rather, he researched the firm data base for information on pending acquisitions and tender- offers.
Mr. Metro furnished the information to his friend and former law school classmate Frank Tamayo. Typically he furnished Mr. Tamayo the information at a personal meeting held in a bar or coffee shop near their respective places of employment in mid-town Manhattan. During the meeting Mr. Tamayo would be furnished information about the deal and the name or ticker symbol of the company whose securities should be purchased. Mr. Tamayo typically recorded the name on a small piece of paper.
The actual trades were placed by Vladimir Eydelman, a stock broker in Colts Neck, New Jersey. He would meet with Mr. Tamayo to acquire the information. Typically the meeting would be held near the large clock in New York City’s Grand Central Terminal. Mr. Tamayo would show the broker the slip of paper with the name of the company or ticker system for the securities to be purchased. The slip of paper would then be destroyed. According to the charging papers, Mr. Eydelman knew the source of the information. The broker would place trades for himself, family members, friends, clients and Mr. Tamayo. The shares would usually be sold shortly after the deal announcement.
Over the course of the scheme, information on thirteen deals was obtained by the clerk and eventually transmitted to Mr. Eydelman. About $5.6 million was made in trading profits. The broker continually reinvested about $7, 000 from the initial deal for Mr. Metro which he held. That sum grew to about $168,000. Messrs. Eydelman and Metro were previously named in complaints filed by the U.S. Attorney’s Office for New Jersey and the SEC. U.S. v. Eydelman (D.N.J. Filed March 19, 2014); SEC v. Eydelman, Civil Action No. 3-14-cv-01742 (D.N.J. Filed March 19, 2014). See Lit. Rel. No. 22948 (March 19, 2014). Mr. Tamayo was not named in those papers. The middleman was then identified as a confidential witness. The actions are pending.