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September 26, 2023

Idiots Accused of Insider Trading Used Sketchy Post-It Method, Creative Digestion

Insider trading accusations are often boring, routine and totally predictable. But this reads like something out of a poorly-written detective novel, for real:

The Securities and Exchange Commission today charged a stockbroker and a managing clerk at a law firm with insider trading around more than a dozen mergers or other corporate transactions for illicit profits of $5.6 million during a four-year period.

The SEC alleges that Vladimir Eydelman and Steven Metro were linked through a mutual friend who acted as a middleman in the illegal trading scheme.  Metro, who works at Simpson Thacher & Bartlett in New York, obtained material nonpublic information about corporate clients involved in pending deals by accessing confidential documents in the law firm’s computer system.  Metro typically tipped the middleman during in-person meetings at a New York City coffee shop, and the middleman later met Eydelman, who was his stockbroker, near the clock and information booth in Grand Central Terminal.  The middleman tipped Eydelman, who was a registered representative at Oppenheimer and is now at Morgan Stanley, by showing him a post-it note or napkin with the relevant ticker symbol.  After the middleman chewed up and sometimes even ate the note or napkin, Eydelman went on to use the illicit tip to illegally trade on his own behalf as well as for family members, the middleman, and other customers.  The middleman allocated a portion of his profits for eventual payment back to Metro in exchange for the inside information.  Metro also personally traded in advance of at least two deals.

Wait a second… the middleman ATE the evidence? Is Post-it note glue even safe to digest, bro?

This is really serious stuff, you guys, the SEC has totes had it with "trusted professionals" engaging in shady ass behavior like this.

In a parallel action, the U.S. Attorney’s Office for the District of New Jersey today announced criminal charges against Metro, who lives in Katonah, N.Y., and Eydelman, who lives in Colts Neck, N.J.  

“Law firms are sanctuaries for the confidential treatment of client information, and this scheme victimized not only a law firm but also its corporate clients and ultimately the investors in those companies,” said Daniel M. Hawke, chief of the SEC Enforcement Division’s Market Abuse Unit.  “We are continuing to combat serial insider trading schemes, particularly by law firm employees and other professionals who are entrusted with extremely sensitive market-moving information.”

The whole thing started, as these things do, innocently enough. Apparently, back in early 2009, Metro and "the middleman" were hanging with some pals downing a few brews. At some point, Metro and "the Mids" split off to have a cozy chat about stocks and Mids was bitching that he held some Sirius XM stock that he was worried about as bankruptcy was sort of looming over Sirius then. Metro, helpful dude that he is, consoled the Mids by letting him know Liberty Media Corp was going to invest more than $500 mil in Sirius, and he knew this because he read it at the law firm where he worked. Mids couldn't keep his mouth shut so he subsequently rang up Eydelman and told him to buy more Sirius, serious. Eydelman was a little skeptical but the Mids was like "no, bro, it's cool, this guy I know at a law firm told me not to worry."

The Mids put aside a $7000 "thanks bro" gift for Metro in return for the insider info but instead of taking it, Metro said the Mids should leave it in his own account and they should totally do some more insider trading later with it because why not?

Well, being sneaky and eating the evidence obviously didn't work because here we are. When will you people learn?!


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