'Does He Still Have the Info?'

     WASHINGTON (CN) - The SEC today charged a stockbroker and a law firm manager with making $5.6 from illegal inside trading over 4 years.
     The SEC sued Vladimir Eydelman, of Colts Neck, N.J., and Steven Metro, of Katonah, N.Y., in New Jersey Federal Court.
     "This is an insider trading case," the 72-page lawsuit begins. "The scheme involved three participants: (1) Metro, the source and a law firm employee, who over the course of several years repeatedly stole material, nonpublic information about pending mergers and acquisitions and tender offers from his employer, Simpson Thacher & Bartlett LLP ('Simpson Thacher'), an international law firm that serves as legal adviser to many companies considering corporate transactions or acquisitions; (2) a middleman ('Middleman'), who passed along the information to Eydelman and himself traded in at least 12 instances; and (3) Eydelman, the Middleman's broker, who received the tips from the Middleman and traded himself and on behalf of his customers on the basis of the material, nonpublic information in at least 13 instances.
     "From at least February 2009 through the present (the 'Relevant Period'), Metro was an employee of Simpson Thacher. Metro repeatedly accessed material, nonpublic information on Simpson Thacher's computer systems during the Relevant Period to identify documents establishing that a client of the firm was about to participate in a corporate transaction. He then arranged meetings with the Middleman at bars and coffee shops in New York City and passed on the material, nonpublic information with the understanding that the Middleman would use the information to trade.
     "The Middleman then passed the information to his friend and stockbroker, Eydelman. Except at the very beginning of the scheme, the passing of material, nonpublic information occurred at the same location - Grand Central Station. The Middleman passed the information to Eydelman by showing him a post-it note or napkin on which the Middleman wrote the stock ticker symbol of the company to be acquired. The Middleman then chewed up, and sometimes ate (with Eydelman watching), the post-it note or napkin to destroy evidence of the tip. The Middleman also conveyed to Eydelman at this time the approximate transaction price and timing of the deal. Following this interaction, Eydelman returned to his office, typically gathered research relating to the target company, and e-mailed the Middleman the research, and/or Eydelman's supposed thoughts as to why buying the stock made sense, with the intent to create a paper trail of false and contrived emails that purportedly served as non-fraudulent bases for the illegal trading by the Middleman and Eydelman.
     Eydelman knew that the information passed to him was material and nonpublic and that the Middleman had received it from a friend who worked at a law firm. Indeed, in a recent meeting between the Middleman and Eydelman, the Middleman brought up the 'boy at the law firm,' to which Eydelman responded, 'What's up with him ... does he still have the info?'"
     The U.S. Attorney's Office announced parallel criminal charges.