Clerk found guilty of being part of Insider Trading Scheme

Clerk found guilty of being part of Insider Trading Scheme

The former managing clerk for a prominent, international law firm was sentenced on Wednesday to 46 months in prison for stealing sensitive, confidential information for use in a five-year insider trader scheme that yielded net profits of more than $5.6 million.

Steven Metro, 42, of Katonah, New York, previously pleaded guilty before U.S. District Judge Michael A. Shipp to the first two counts of an indictment charging him with securities fraud and conspiracies to commit securities and tender offer fraud.

According to documents filed in this case and statements made in court:

From 2009 to 2013, Metro stole material nonpublic information from his then-employer, Simpson Thacher & Bartlett LLP, one of the nation’s premier mergers and acquisitions firms. The information related to corporate transactions, such as mergers and acquisitions or tender offers, in which the firm represented a party or financial advisor to the transaction. As the firm’s managing clerk, Metro did not personally work on most of these transactions. Instead, Metro stole the inside information by scouring the firm’s computer system for client names and the keywords “merger agreement,” “bid letter,” “engagement letter,” and “due diligence.”

After obtaining the inside information, Metro would meet his friend, Frank Tamayo, 43, of Brooklyn, New York, at a bar, coffee shop, or other location near their respective workplaces in midtown Manhattan. During these meetings, Metro provided Tamayo material information pertaining to, among other things, the names and/or ticker symbols of the companies securities that should be purchased. Tamayo would write the security’s ticker symbol on a small piece of paper or napkin and commit the rest of the inside information to memory.

Afterwards, Tamayo would meet Vladimir Eydelman, 44, formerly of Colts Neck, New Jersey, usually at a locational near Eydelman’s workplace, such as at the large clock in New York City’s Grand Central Terminal. Tamayo would show Eydelman the paper or napkin with the ticker symbol of the company whose securities should be purchased. After Eydelman memorized the ticker symbol, Tamayo would place the paper or napkin into his mouth and chew it until it was destroyed.

Throughout the course of the approximately five-year scheme, Tamayo reinvested the approximately$7,000 in profits that Metro made on the first deal, and updated Metro on the running balance of his profits from the insider trading scheme. As of October 2013, by which time the conspirators had traded ahead of at least 13 planned corporate transactions, Metro’s share of the profits had reached approximately $168,000. Metro sought to “cash out” his share of the accrued profits from the insider trading scheme, pressing Tamayo to “liberate some cash” during a meeting in January 2014. Eydelman paid approximately $7,000 in cash to Tamayo in February 2014, with the expectation that Tamayo would use the cash to compensate his law firm source – o.e., Metro – for providing them the inside information.

By exploiting the information that Metro took from the firm, Metro, Tamayo and Eydelman netted more than $5.6 million in illicit profits over five years.

In addition to the prison term, Metro was sentenced to three years of supervised release and fined $10,000.

Tamayo and Eydelman have both pleaded guilty to their roles in the scheme; Tamayo is scheduled to be sentenced Sept. 15, 2016. and Eydelman is scheduled to be sentenced Sept. 22, 2016.

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