Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Tuesday, November 20, 2007

Wall St. Broker Settles Insider Trading Charges

The SEC announced that on Nov. 14, 2007, Andrew A. Srebnik, a former registered  representative  at  Bear,  Stearns  & Co., Inc., settled insider trading charges in SEC v. Guttenberg.  Srebnik  is  one of fourteen defendants in the Commission's complaint, which  alleged  illegal insider trading in connection with two related schemes   in  which  Wall  Street  professionals  serially  traded  on material, nonpublic  information  tipped,  in  exchange  for  cash kickbacks, by insiders at UBS Securities LLC and Morgan Stanley & Co., Inc.

What is interesting about this case is that the SEC alleged that Mitchel  S.  Guttenberg, an executive director  in  the  equity research department of UBS, illegally tipped information  concerning  upcoming  UBS  analyst upgrades  and  downgrades to two Wall Street traders, including Franklin, but not to Srebnik.  Instead, the complaint alleged, Srebnik  worked  on a trading desk at Bear Stearns where  he  had access to Franklin's trading information and, based on Franklin's trading patterns, Srebnik figured out that he was using material,nonpublic    information  to  trade  ahead  of  upcoming  UBS  analyst recommendations.  Srebnik monitored Franklin's trading at Bear  Stearns and used the UBS tips to purchase and sell securities in his  personal  account.

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