Funds News

Law clerk in napkin-chewing insider case gets nearly 4 years prison

Sept 14 (Reuters) - The former law firm clerk whose tips about corporate mergers fueled an insider trading scheme in which one participant ate evidence written on napkins and Post-its in Grand Central Terminal was sentenced to nearly four years in prison on Wednesday.

Steven Metro, a former managing clerk at Simpson Thacher & Bartlett, received his 46-month sentence from U.S. District Judge Michael Shipp in Trenton, New Jersey, after pleading guilty last November to securities fraud and conspiracy charges, prosecutors said.

James Froccaro, a lawyer for Metro, declined to comment.

According to prosecutors, Metro, 42, of Katonah, New York, would pass tips about mergers and other transactions involving Simpson Thacher clients to his friend and law school classmate Frank Tamayo, a Brooklyn mortgage broker, from 2009 to 2013.

Prosecutors said that after getting the tips in midtown Manhattan bars and coffee shops, Tamayo would meet Vladimir Eydelman, then a Morgan Stanley stockbroker, at Grand Central’s main clock.

Once there, Tamayo would show Eydelman the ticker symbol of the company involved, and then chew up and sometimes swallow whatever he wrote the tip on, prosecutors said.

Eydelman, formerly of Colts Neck, New Jersey, made most of the roughly $5.6 million profit from insider trading on at least 13 companies, while Metro made just $168,000, prosecutors said.

The scheme unraveled in early 2014 after Tamayo began to secretly record the other defendants.

According to the U.S. Securities and Exchange Commission, which filed related civil charges, Tamayo in one conversation brought up the “boy at the law firm,” prompting Eydelman to respond, “What’s up with him ... does he still have the info?”

Metro’s sentence was shorter than the 57 to 71 months he could have gotten under recommended federal guidelines.

Tamayo and Eydelman have also pleaded guilty. Shipp is scheduled to sentence them on Sept. 21 and Sept. 22, respectively, court records show.

Neither Morgan Stanley nor Simpson Thacher was accused of wrongdoing.

The case is U.S. v. Metro, U.S. District Court, District of New Jersey, No. 15-cr-00028. (Reporting by Jonathan Stempel in New York; Editing by Bernard Orr)