Friday, March 2, 2007

Insider Trading Smackdown

Having been roundly criticized on Capitol Hill for perceived softness on insider trading, the SEC and U.S. Attorney's Office for the Southern District of New York announced a set of indictments and civil fraud charges related to two insider trading schemes, involving a total of thirteen defendants, that allegedly netted over $8 million in total profits.  The trading involved tipping from insiders at securities firms, including information from an attorney at Morgan Stanley's compliance office -- the very place at the firm charged with preventing the misuse of confidential information.  The Morgan Stanley trading involved information about pending corporate deals in 2004 and 2005, and the lawyer, Randi Collotta, was charged along with her husband, Christopher, who is also a lawyer.  The other set of trading involved tipping by Mitchel Guttenberg, an executive in the institutional client department at UBS, who sold information about stock analyst upgrades and downgrades before their announcement.  A press release (here) from the Southern District of New York prosecutors provides a handy table listing the various conspiracy and securities fraud charges, and four defendants have pleaded guilty.  Nothing quite gets the attention of Wall Street -- and Congress -- like a good insider trading saga, and this one will certainly draw notice with two major investment firms involved. (ph)

Civil Enforcement, Fraud, Insider Trading, Securities | Permalink

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