A stock broker in New York admitted Wednesday that for five years he traded on inside information stolen from one of Wall Street’s best known law firms.
Vladimir Eydelman, 43, formerly of Colts Neck, New Jersey, pleaded guilty before Judge Michael Shipp in Trenton federal court.
He faces up to twenty years in prison and a fine of up to $5 million, plus forfeiture of the illegal trading gains. He was charged with one count of conspiracy to commit securities and tender offer fraud, one count of securities fraud, and one count of tender offer fraud.
His sentencing is scheduled for December 21.
From 2009 to 2013, Eydelman, a broker-dealer at Oppenheimer & Co. and later at Morgan Stanley, traded on material nonpublic information provided by his brokerage client, Frank Tamayo, 42, of Brooklyn, New York.
Tamayo got the inside information from his friend and former law school classmate, Steven Metro, 41, of Katonah, New York.
Metro was the managing clerk of the New York office of Simpson Thacher & Bartlett LLP, one of the top mergers and acquisitions firms in the world.
Metro tipped Tamayo and in turn Eydelman on mergers and acquisitions and tender offers in which Simpson Thacher represented a party or a financial advisor to the transaction.
Metro stole the inside information from Simpson Thacher’s computer system. He found it by searching for “merger agreement,” “bid letter,” “engagement letter,” “due diligence,” as well as client names and client-matter numbers, the DOJ said.
Metro usually tipped Tamayo in person at a bar or coffee shop near their offices in midtown Manhattan. “Tamayo generally would write the security’s ticker symbol on a small piece of paper or napkin and commit to memory any pricing/timing inside information provided by Metro,” the DOJ said.
Tamayo would then meet with Eydelman, often under the large clock in New York City’s Grand Central Terminal, the DOJ said.
After Tamayo showed Eydelman the paper or napkin, Tamayo would put it in his mouth and chew “until it was destroyed,” the DOJ said.
Eydelman bought and sold securities for himself, family members, friends, and clients, including Tamayo. Trades in at least 13 companies over five years generated profits of more than $5.6 million, the DOJ said.
The Simpson Thacher deals involved Sirius XM Holdings, Arch Coal Inc., and Tyco International, among others.
Tamayo pleaded guilty in September 2014 to conspiracy and securities and tender offer fraud. He hasn’t been sentenced yet.
Metro has pleaded not guilty to the charges against him. His trial before Judge Shipp is set to start on February 8, 2016.
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Tamayo settled insider trading charges with the SEC in July this year. He agreed to disgorge $1 million and cooperate in the civil enforcement actions against Eydelman and Metro.
The SEC’s cases against Eydelman and Metrothem have been on hold during their criminal cases.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.