Third Idiot Charged in Elaborate Post-It Eating Insider Trading Scheme

Posted on by Adrienne Gonzalez

Do you all remember the Post-It note eating fools the SEC accused of insider trading?

Well, now the SEC has charged the alleged "middleman," who was the one the SEC claimed was eating the Post-it notes with insider-y things written on them back in March though they didn't reveal his name at the time.

Today's press release doesn't hesistate to name this pica-suffering middleman:

The Securities and Exchange Commission today charged a Brooklyn man with facilitating a $5.6 million insider trading scheme that typically involved the passing of illegal tips via napkins or post-it notes at Grand Central Terminal.

Earlier this year, the SEC charged a stockbroker and a law firm managing clerk with insider trading and alleged they were connected by a mutual friend who served as a “middleman” in an effort to keep the two unlinked.  In a separate complaint filed today in U.S. District Court for the District of New Jersey, the SEC identifies Frank Tamayo as that middleman.  The SEC alleges that Tamayo received material nonpublic information from Steven Metro about 13 impending corporate deals involving clients of the law firm where Metro worked.  Tamayo then tipped his stockbroker Vladimir Eydelman, who used the confidential information to illegally trade for himself and for Tamayo and other customers.  Tamayo allocated a portion of his ill-gotten profits for eventual payback to Metro for the inside information.

“As the middleman, Tamayo was the firewall between Metro and Eydelman.  Metro had the information, Eydelman did the trading, and Tamayo kept them apart,” said Robert Cohen, Co-Deputy Chief of the SEC Enforcement Division’s Market Abuse Unit.  “But they were wrong in believing that this would stop the SEC from detecting their scheme.”

You see how well all of this turned out for everyone, except for 3M company, which profited off the sale of Post-it notes which Tamayo later ate. That can't be good for you.

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This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.

The employer-sponsored health care system provides health insurance to more than 60 million people–but it does not exist in a vacuum. Employers are often reminded of this fact when their health care costs go up each year. Factored into that cost increase are premiums employers pay to hospitals to help those institutions provide care to the uninsured.

Two years ago the actuarial firm Milliman put a price tag on this cost-shifting: employers pay an additional $1,115 more for a family of four’s health insurance to make up for this loss. That totals about $88 billion annually.


This cost-shifting is once again becoming an issue as the federal government looks to provide insurance to people who cannot otherwise get it because they are considered high-risk.

States have for years created high-risk pools to separate the people with especially high health care costs from the rest of the population. Normally these folks can’t get insurance. The high risk pool absorbs some of the cost to insurers.

Now the federal government is getting in on the action, in large part to address the issue that insurers regularly refuse to issue insurance to some people or they do so at rates that are prohibitively high.

A new analysis on so-called high risk insurance pools that the federal government will set up as soon as July as a result of health reform makes the point that the money allotted will run out much sooner than originally thought. Instead of covering as many as 7 million people who could qualify there will likely be enough money to cover about 200,000 annually. This is not surprising. The need is always greater; the funds always inadequate.

So what does this all mean for employers?

It appears one step removed. But, as employers know, the health care system is fragmented yet, in the end, someone – either the federal government or employers – ends up paying the cost. In the analysis, published by the Center for Studying Health System Change, the authors point out that states with high risk pools currently do not assess self-insured employer plans.

Under the federal law this will change. Employers will face an assessment. One possibility is that the assessment will have to go up in order to increase the amount of money in the pot. The other of course is to limit who can get access to the high risk pools.

It remains to be seen what kind of conflict this issue will provoke. Like many other aspects of the new health care reform, it has the potential to fade away or to metastasize into something problematic.

But one thing remains likely: costs will continue to go up. The question is who will pay for these costs? If these assessments are any sign, it will be insurers and self-insured employers.

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The CAQ’s continuing dialogue with individual investors indicates that many in the marketplace do not fully understand the scope of the audit process and the responsibilities placed on public company auditors. The In-Depth Guide to Public Company Auditing will help to bridge that information gap. The new Guide describes how a public company audit firm decides to accept a new audit engagement, how it assesses the risk that the financial statements contain material misstatements as part of determining the audit’s scope, and then how the auditors perform and report their findings – all in plain English. [Cindy Fornelli/CAQ, Guide]