U.S. News

Florida lawyer, neighbor charged with insider trading

(Reuters) - A Florida lawyer and his neighbor were arrested on Thursday on charges that they engaged in a nearly $1 million insider trading scheme using information the attorney improperly obtained from his law firm’s databases, prosecutors said.

Walter “Chet” Little, who was a partner at the law firm Foley & Lardner when prosecutors said the trading took place, and Andrew Berke were charged with conspiracy and securities fraud in a criminal complaint filed in Manhattan federal court.

Little, who left Foley in 2016 and joined the law firm Bradley Arant Boult Cummings, and Berke were arrested in Florida, where both men reside, according to the office of Acting U.S. Attorney Joon Kim.

The U.S. Securities and Exchange Commission also filed a civil lawsuit against both men.

“We are evaluating the allegations and our response,” Todd Foster, a lawyer for Little, said in a statement. “Mr. Little maintains his innocence.”

Berke’s lawyer, Caroline Mehta, declined to comment.

Beginning in 2015, the complaint said, Little used Foley’s document management system to access information about at least seven law firm clients including Oshkosh Corp and Harley-Davidson Inc, even though he billed no work for them.

After learning about upcoming mergers, earnings and other corporate events involving those companies, prosecutors said, Little bought and sold stock and options ahead of public announcements, making more than $320,000 in profits.

He also passed the inside information to Berke, prosecutors said. The SEC said Berke was an executive at a logistics company who has since 2013 lived in the same community as Little, Apollo Beach, Florida.

Prosecutors said that by placing trades based on the inside information, Berke earned around $660,000.

Daniel Farrell, a spokesman for Foley & Lardner, said in a statement that the 840-lawyer firm learned about the activity at issue in June 2016 and reported the matter to authorities.

“We take this matter very seriously, and we have zero tolerance for actions that violate our core values and the trust our clients place in us,” Farrell said.

Little joined Bradley Arant’s Tampa office in July, focusing on representing residential and commercial developers. That law firm did not immediately respond to a request for comment.

The case is U.S. v. Little, et al, U.S. District Court, Southern District of New York, No. 17-mj-3408.

Reporting by Nate Raymond in Boston; Editing by Steve Orlofsky