New York and London have been hit with new insider trading investigations in recent days.
The U.S. Securities and Exchange Commission has charged a Wall Street investment banker, another securities professional, and one of their friends in what it calls “a clandestine insider trading ring” that netted approximately US$1 million in illicit profits by trading ahead of at least 11 mergers, acquisitions, and other corporate deals.
The SEC alleges that an investment banker in UBS Securities LLC’s global healthcare group, Igor Poteroba, tipped a friend to inside information about impending transactions involving pharmaceutical companies. The friend, who worked in the securities industry, then traded in stocks and options of the companies targeted for acquisition, the commission claims, and also tipped another friend who also traded ahead of the news. None of these allegations have been proven.
According to the SEC’s complaint, one of the tipees lived in Toronto for about seven years, and carried out some of the alleged illegal trading in Canadian brokerage accounts. The SEC acknowledged the assistance of the Ontario Securities Commission in its announcement (along with UBS, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority).
The commission is seeking permanent injunctive relief, disgorgement of illicit profits with prejudgment interest, and the imposition of financial penalties against the defendants.
This latest Wall Street case comes hard on the heels of another high-profile insider trading case in the City of London. The UK’s Financial Services Authority and Serious Organized Crime Agency announced that they have arrested seven people in what the FSA says is its’ largest operation against insider dealing, involving 143 people from the FSA along with officers from SOCA (the first time the two agencies have collaborated on an investigation).
Of the seven arrests so far, the FSA says that two are senior professionals at leading City institutions, and one is a hedge fund manager that they suspect of “being involved in a sophisticated and long-running insider dealing ring”. No charges have been announced in that case yet, and nothing has been proven in court.
“It is believed that the city professionals passed inside information to traders (either directly or via middlemen) who traded based on this information and have made significant profits as a result,” the FSA said.
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Insider trading ring used Canadian brokerage accounts: SEC
New York, London rocked by insider trading allegations
- By: James Langton
- March 25, 2010 March 25, 2010
- 11:19