Case Synthesis: Morgan Stanley, Simpson Thacher & Bartlett LLP, and Oppenheimer and Co. Involved in Insider Trading
Tse Hiu Lam 2013559921
Assessment 2 – Case Synthesis: Morgan Stanley, Simpson Thacher & Bartlett LLP, Oppenheimer & Co, Inc. involved
Introduction
Today’s financial market is a vibrant yet unpredictable domain, with mergers and acquisitions that sometimes cannot be predicted by the market trend or even with sophisticated information technology. With such uncertainty, investors are disposed to gain all necessary information upon making investment decisions. This puts those who handle sensitive undisclosed information in an ethical dilemma where such information can be exploited for personal gain, at the same time unknowing investors are put at a disadvantage.(Matthews) In 2013, Steven Metro, a managing clerk at Simpson Thacher & Bartlett LLP, Vladimir Eydelman, a broker at Morgan Stanley and previously at Oppenheimer & Co and Frank Tomayo, a mortgage broker were convicted of an insider trading scheme that generated $5.6 million of illicit profit. To avoid computer surveillance and traces of evidence, Tomayo passed on insider information given by Metro to Eydelman through post-it notes and by chewing them up. The insider information that involves the acquisition and mergers of companies was made available to Eydelman, his family, friends, and over 50 clients for investment decision on 13 securities over five years. To conceal traces of income in Metro’s brokerage account, he hired Tomayo as a middleman, whose brokerage account was handled by Eydelman. Upon receiving insider information from Metro, Eydelman would forge researched documents based on public information in order to avoid suspicions for timely trades. Tomayo also acted as a bridge between Eydelman and Metro to prevent direct communication between the two parties. The men were charged with conspiracy to commit securities fraud, securities fraud and tender offer frauds(SEC Complaint). Each man can face a maximum of 20 years in prison.
Causes and Antecedents
Being a managing clerk at Simpson Thacher,
Assessment 2 – Case Synthesis: Morgan Stanley, Simpson Thacher & Bartlett LLP, Oppenheimer & Co, Inc. involved
Introduction
Today’s financial market is a vibrant yet unpredictable domain, with mergers and acquisitions that sometimes cannot be predicted by the market trend or even with sophisticated information technology. With such uncertainty, investors are disposed to gain all necessary information upon making investment decisions. This puts those who handle sensitive undisclosed information in an ethical dilemma where such information can be exploited for personal gain, at the same time unknowing investors are put at a disadvantage.(Matthews) In 2013, Steven Metro, a managing clerk at Simpson Thacher & Bartlett LLP, Vladimir Eydelman, a broker at Morgan Stanley and previously at Oppenheimer & Co and Frank Tomayo, a mortgage broker were convicted of an insider trading scheme that generated $5.6 million of illicit profit. To avoid computer surveillance and traces of evidence, Tomayo passed on insider information given by Metro to Eydelman through post-it notes and by chewing them up. The insider information that involves the acquisition and mergers of companies was made available to Eydelman, his family, friends, and over 50 clients for investment decision on 13 securities over five years. To conceal traces of income in Metro’s brokerage account, he hired Tomayo as a middleman, whose brokerage account was handled by Eydelman. Upon receiving insider information from Metro, Eydelman would forge researched documents based on public information in order to avoid suspicions for timely trades. Tomayo also acted as a bridge between Eydelman and Metro to prevent direct communication between the two parties. The men were charged with conspiracy to commit securities fraud, securities fraud and tender offer frauds(SEC Complaint). Each man can face a maximum of 20 years in prison.
Causes and Antecedents
Being a managing clerk at Simpson Thacher,
References: 1. Braswell, M. (2014, September 29). Morgan Stanley wins back $3M bonus from insider trader. Retrieved from http://www.investmentnews.com/article/20140929/FREE/140929901/morgan-stanley-wins-back-3m-bonus-from-insider-trader 2. Commission, U.s. Securities And Exchange. SEC Complaint: Vladimir Eydelman and Steven Metro (n.d.): n. pag. UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY. Web 3. Mathews, Christopher. "Why Is Insider Trading Even Illegal? | TIME.com." Business Money Why Is Insider Trading Even Illegal Comments. TIME, 26 June 2013. Web. 23 Nov. 2014.