Tuesday, November 20, 2007
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.