Posts Tagged With Insider Trading

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Managing Director of Investment Bank Sentenced to 3 Years in Prison for Insider Trading

On February 17, 2017, Sean Stewart was sentenced to 36 months in prison by U.S. District Judge Laura Swain, for providing inside information to his father, Robert Stewart.  Sean Stewart, who was a former managing director at an investment advisory firm in Manhattan, was convicted after trial on August 17, 2016.  He provided inside information to his father about five health care company mergers and acquisitions before they were announced.  Sean Stewart’s father then traded
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Investment Analyst Convicted of Securities Fraud and Wire Fraud for Insider Trading

On January 30, 2017, John Afriyie, a former analyst at a Manhattan-based private investment fund (the “Fund”), was convicted of securities fraud and wire fraud for insider trading, after a jury trial.  According to the Indictment and the evidence presented at trial, in January 2016, Apollo Investment Management LLC (“Apollo”) contacted the Fund about whether the Fund would provide debt financing for a possible acquisition by Apollo of ADT Corporation.  After entering into a non-disclosure
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Director at Investment Bank Sentenced to Five Months in Prison for Insider Trading

On January 11, 2017, Steven McClatchey, a director at an investment bank in Manhattan, was sentenced to five months in prison in connection with an insider trading scheme.  According to the Complaint, Information and statements made in court proceedings, McClatchey learned about impending mergers and acquisitions as part of his employment with the investment bank, which advised companies involved in those deals.  From February 2014 to September 2015, McClatchey provided tips in advance of more
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Manhattan U.S. Attorney Announces Arrest of Macau Resident and Unsealing of Charges against Three Individuals for Insider Trading Based on Information Hacked from Prominent U.S. Law Firms

On December 25, 2016, Iat Hong, a resident of Macau, was arrested in Hong Kong and is now pending extradition proceedings in connection with an alleged scheme to trade on material, nonpublic information obtained through hacks of multiple prominent U.S.-based international law firms.  On December 27, 2016, a thirteen count indictment against Hong and two alleged co-conspirators, Bo Zheng and Chin Hung, was unsealed in the SDNY.  According to the indictment, the defendants successfully obtained
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Investment Adviser Pleads Guilty in Manhattan Federal Court to Insider Trading

On October 25, 2016, David Hobson, an investment adviser in the Providence, Rhode Island offices of two different brokerage firms, pled guilty in the Southern District of New York to one count of conspiracy to commit securities fraud for his role in a scheme to commit insider trading with his friend and client Michael Macioco. Between 2008 and 2014, Macioco breached his duty of confidentiality to his employer, an unnamed pharmaceutical company, by providing material
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Broker-Dealer Gets Three Years in Prison for Trading on Inside Information Stolen from Prominent Law Firm

On September 30, 2016, Vladimir Eydelman was sentenced to 36 months in prison for participating in a five-year insider trading scheme that relied on information stolen from the international law firm Simpson Thacher & Bartlett LLP.  Eydelman traded on material nonpublic information provided to him by a brokerage client, Frank Tamayo, who had obtained the inside information from his law school classmate, Steven Metro, who was the managing clerk of the New York office of
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Managing Director of Investment Bank Found Guilty of Insider Trading Charges

On August 17, Sean Stewart was convicted after trial of providing inside information to his father, Robert Stewart, to trade on five healthcare companies’ stocks in advance of acquisitions.  Sean Stewart was a vice president and managing director at two investment banks in Manhattan.  He provided inside information to his father, who traded the stocks personally and through a colleague—who later began cooperating with the government—based on the information.  Evidence showed that Robert Stewart used
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Long Island Investment Advisor and Law Firm Attorney Indicted in Insider Trading Scheme

On August 10, Tibor Klein, founder and president of Klein Financial Services, and Robert Schulman, a former partner in a Richmond-based global law firm, were indicted on charges of securities fraud and conspiracy to commit securities fraud.  The indictment alleges that through his representation of King Pharmaceuticals in patent litigation, Schulman learned of a pending merger between King and Pfizer, Inc. in August 2010.  Schulman then allegedly revealed this information to Klein at a meeting
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Principal Investigator in Clinical Trial Charged with Insider Trading

On August 4, 2016, Edward Kosinski pled not guilty to two counts of securities fraud-insider trading.  In 2014, Kosinski was working as a Principal Investigator for a clinical trial being run by Regado Biosciences, Inc., a company in which he owned 40,000 shares of common stock.  The government alleges that on June 29, 2014, he learned material non-public information through his role as a principal investigator about allergic reactions occurring in the clinical trial.  He
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HSBC’s FX Cash-Trading Desks Arrested for Front Running Scheme

On July 20, Mark Johnson, the head of global foreign exchange cash trading at HSBC Bank plc, and Stuart Scott, and HSBC’s former head of foreign exchange cash trading for Europe, the Middle East and Africa, were charged with conspiracy to commit wire fraud, based on a front running scheme.  It is alleged that, in 2011, Johnson and Scott misused confidential information about a client’s planned sale of a foreign subsidiary.  United States v. Johnson,
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Investment Bank Director Pleads Guilty in Manhattan Federal Court to Insider Trading

On July 12, Steven McClatchey, a director at an investment bank in Manhattan, pled guilty to one count of conspiracy to commit securities and wire fraud and one count of securities fraud.  According to the government, McClatchey provided nonpublic information about upcoming mergers and acquisitions to his close friend, Gary Pusey, who traded on the information.  Pusey rewarded McClatchey with home renovations and cash kickbacks.  In total, Pusey reaped approximately $76,000 in gains, based on
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Hedge Fund Portfolio Manager Sanjay Valvani and Former Portfolio Manager Stefan Lumiere Charged in Manhattan Federal Court

On June 15, Sanjay Valvani and Stefan Lumiere, the current and former managers of a healthcare-focused New York hedge fund, were charged with multiple counts of fraud in the SDNY.  Valvani allegedly engaged in a scheme in which he would obtain confidential information regarding the FDA’s pending approval of generic drug applications from senior FDA official Gordon Johnston and then trade on the inside information, earning himself approximately $25 million in profits.  Valvani is also
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SEC Returns $6 Million to Diamondback Capital

On June 3, the SEC agreed to return $6 million forfeited by Diamondback Capital, LLC as a result of a non-prosecution agreement pursuant to an insider trading investigation.  This decision by the SEC comes on the heels of the Second Circuit’s decision in Newman, where the court overturned the insider-trading convictions of two Level Global Investors and LP cofounders because the prosecutors did not show that the tippers received a significant benefit for their
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Investment Advisor Charged in Manhattan Federal Court with Insider Trading

On June 3, David Hobson, who served as an investment advisor at a major broker-dealer, was arrested on charges of insider trading.  Between 2008 and 2014, Hobson allegedly traded on inside information about a pharmaceutical client, a company that employed his friend, coconspirator, and cooperator Michael Maciocio.  Maciocio has already pled guilty and admitted his participation in the scheme in which he would share inside information about potential acquisitions and transactions with Hobson, and Hobson,
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William T. “Billy” Walters Charged in Manhattan Federal Court with Insider Trading

On May 19, William T. Walters was arrested in Las Vegas on charges of conspiracy, wire fraud, and securities fraud, relating to an insider trading scheme that had taken place between 2008 and 2014.  During that time period, Walters was regularly receiving inside information about Dean Foods (a Fortune 500 company) from a member of its board of directors, Thomas C. Davis.  Walters traded on the inside knowledge he received in advance of public announcements,
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Former Analyst Arrested and Charged with Insider Trading

On April 13, John Afriyie, a former analyst at a Manhattan-based private investment fund (the “Fund”), was arrested and charged with insider trading.  Afriyie is alleged to have used the Fund’s network server to obtain material nonpublic information about a potential acquisition of ADP Corporation by Apollo Investment Management LLC.  The Fund had this information because it was discussing whether to provide debt financing to Apollo for the potential acquisition, and the Fund had entered
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SAC Capital Management Companies Sentenced for Insider Trading

On April 10, Judge Laura T. Swain of the Southern District of New York accepted the guilty pleas of the SAC Capital Management Companies (“SAC”) and imposed a sentence as contemplated by SAC’s plea agreement.  Judge Swain ordered SAC to pay a $900 million criminal fine, imposed the maximum five-year term of probation, and effectively closed the hedge fund to outside investors by ordering it to terminate its investment advisory business.  The sentence also required
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Members of Insider Trading Scheme Sentenced

On April 9, 16, and 22, five individuals were sentenced for their roles in an insider trading scheme based on information divulged by insiders at pharmaceutical/medical technology firms in New Jersey.  Lawrence Grum and Michael Castelli allegedly were the primary traders in the scheme.  Grum was sentenced to one year and one day in prison, while Castelli was sentenced to nine months in prison.  Grum and Castelli made profitable trades based on nonpublic information including
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Second Circuit Affirms Gupta Insider Trading Conviction

On March 25, the Second Circuit Court of Appeals affirmed the insider trading conviction of former Goldman Sachs Group Inc. (“Goldman”) director Rajat Gupta.  In October 2012, Judge Jed Rakoff sentenced Gupta to two years in prison and a $5 million fine for passing tips from Goldman board meetings to hedge fund manager Raj Rajaratnam.  The Court of Appeals rejected Gupta’s argument that his conviction should be overturned because it was improperly based on hearsay
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Man Arrested and Charged for Market Manipulation and Insider Trading

On March 10, Nedko Nedev was arrested and charged by the U.S. Attorney’s Office for the Southern District of New York with various crimes relating to market manipulation, insider trading and identity theft.  Nedev was charged with devising and carrying out a scheme to manipulate the market for securities of Rocky Mountain Chocolate Factory, Inc. and Avon Products, Inc. through filing sham tender offers.  The scheme involving Rocky Mountain took place in 2012 and the
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Judge Pauley Denies in Part Motion to Dismiss Complaint Against Prosecutors and Agents for Level Global Hedge Fund Raid

On March 10, U.S. District Judge William H. Pauley III of the Southern District of New York granted in part and denied in part a motion to dismiss in a case brought by David Ganek, founder of Level Global Investors.  Ganek’s complaint, filed in February 2015, alleges that the defendants—prosecutors and FBI agents involved in a 2010 raid of Level Global—violated his civil rights.  He seeks compensatory and punitive damages.  The complaint alleges that the
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Supreme Court Grants Certiorari in Salman v. United States

On January 19, the Supreme Court granted certiorari in Salman v. United States, to decide what the prosecution must prove to establish that a tipper received a “personal benefit.”  In Salman, the Ninth Circuit held that a personal benefit is established when tips are made to a relative or friend as a gift.  The Ninth Circuit’s decision disagreed with the Second Circuit’s decision in United States v. Newman, which interpreted “personal benefit”
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Head of Stock Trading Operation Indicted in Scheme to Trade on Inside Information

On November 13, a federal grand jury in the District of New Jersey indicted Steven Fishoff, the owner and operator of a stock trading operation, for his alleged participation in an insider trading scheme.  The scheme is alleged to have occurred over multiple years and to have netted more than $3.9 million in illicit profits.  Fishoff, like his co-conspirators, would express interest in stock offerings by publicly traded companies and then, after learning material nonpublic
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DOJ Drops Hold on SEC’s Administrative Case Against Steven A. Cohen of SAC Capital

30On November 30, federal prosecutors told a Securities and Exchange Commission judge that they no longer need a stay on the agency’s administrative case against hedge fund manager Steven A. Cohen.  The SEC had charged Cohen with failing to supervise his firm after two of its employees, Michael Steinberg and Mathew Martoma, were accused and ultimately convicted of insider trading.  But the administrative enforcement action was stayed at least eight times in two years while
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