March 19 U.S. prosecutors on Wednesday charged a
Morgan Stanley stockbroker and an employee at a prominent
New York law firm with insider trading in more than one dozen
mergers and corporate transactions, resulting in more than $5.6
million of illegal profit.
Authorities said Steven Metro, a managing clerk at Simpson
Thacher & Bartlett, would pass tips about pending deals
involving the law firm's clients through a middleman to Vladimir
Eydelman, the stockbroker.
They said Eydelman would then trade on the inside
information for himself, family members, the middleman and
customers, and kick a portion back to Metro.
Authorities allege that the middleman would write the ticker
symbol of the stock to be purchased on a napkin or post-it note
that he showed to Eydelman, and then chew up or even swallow the
napkin or note once the stockbroker had memorized the symbol.
Prosecutors said the scheme began in 2009, and resulted in
more than $33 million of illegal trades.
Eydelman, 42, of Colts Neck, New Jersey, was charged with
eight counts of securities fraud, four counts of tender offer
fraud and one count of conspiracy.
Metro, 40, of Katonah, New York, was charged with nine
counts of securities fraud, four counts of tender offer fraud
and one count of conspiracy.
The U.S. Securities and Exchange Commission filed related
civil charges against both men. The defendants are expected to
appear in a Newark, New Jersey federal court on Wednesday.
William Silverman, a lawyer for Eydelman, declined to
comment. Metro's lawyer could not immediately be located.
Morgan Stanley spokesman James Wiggins said the company has
put Eydelman on leave and will cooperate with authorities. "We
do not tolerate insider trading and will take appropriate action
based on the facts," he said.
Simpson Thacher did not immediately respond to requests for
(Reporting by Jonathan Stempel in New York; Editing by Stephen