A law firm clerk at Simpson Thacher & Bartlett LLP and a stockbroker were charged in what U.S. authorities said was an insider-trading scheme that netted more than $5.6 million in illicit profit.
Steven Metro, 40, the managing clerk at Simpson Thacher in New York, was accused of stealing confidential information on mergers, acquisitions, and tender offers and tipping a middleman who passed it to Vladimir Eydelman, 42. Eydelman, a broker, worked at Oppenheimer & Co. and later Morgan Stanley, federal authorities said. The middleman became a cooperating witness.
The men invested more than $33 million over four years to buy securities in 13 transactions, including OfficeMax Inc. and Sirius XM Holdings Inc., authorities said. Eydelman bought securities for himself, family members, friends, and clients, including the cooperating witness, they said. Metro and Eydelman were arrested today and are scheduled to appear in federal court in Newark, New Jersey.
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"These defendants are charged with using confidential information that Metro stole from his employer to reap huge illegal profits," U.S. Attorney Paul Fishman in Newark said in a statement.
In 2012, attorney Matthew Kluger was sentenced in Newark to 12 years in prison, the longest term ever imposed in an insider-trading case, for stealing corporate merger tips from four law firms over 17 years.
The U.S. Securities and Exchange Commission (SEC) also sued Metro and Eydelman today.
"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," Daniel Hawke, chief of the SEC Enforcement Division's Market Abuse Unit, said in a statement.
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