Securities Law Prof Blog

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

Thursday, September 18, 2008

Defendants in UBS and Morgan Stanley Insider Trading Ring Settle Charges

On September 12, 2008, the federal district court for the Southern District of New York entered final judgments against seven defendants — Robert D. Babcock, Mark E. Lenowitz, David A. Glass, Jasper Capital LLC, Randi E. Collotta, Christopher K. Collotta and Marc R. Jurman — in SEC v. Guttenberg, et al., C.A. No. 07 CV 1774 (S.D.N.Y.), an insider trading case the Commission filed on March 1, 2007. The Commission's complaint alleged illegal insider trading charges 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.

The Commission's complaint alleged that from 2001 through 2006, Mitchel S. Guttenberg, an executive director in the equity research department of UBS, illegally tipped material, nonpublic information concerning upcoming UBS analyst upgrades and downgrades to two Wall Street traders, Erik R. Franklin and David M. Tavdy, in exchange for sharing in the illicit profits from their trading on that information. Both Franklin and Tavdy had downstream tippees who traded on the information including Babcock, Lenowitz, Glass and Jasper Capital. The complaint also alleged that from 2005 to 2006, Randi Collotta, an attorney who worked in the global compliance department of Morgan Stanley, together with her husband, Christopher Collotta, an attorney in private practice, tipped material, nonpublic information concerning upcoming corporate acquisitions involving Morgan Stanley's investment banking clients, to Marc Jurman, a registered representative in Florida, in exchange for sharing in his illicit trading profits. Jurman had several downstream tippees, including Babcock, who also traded on the information.

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