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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23667 / September 30, 2016

Securities and Exchange Commission v. Vladimir Eydelman and Steven Metro, Civil Action No. 3:14-cv-01742-MAS-TJB

Stockbroker in Post-It Note Insider Trading Case Sentenced to 36 Months in Prison

Vladimir Eydelman, a former Oppenheimer & Co. and Morgan Stanley stockbroker who participated in a long-standing insider trading scheme, was sentenced today to 36 months in federal prison.

On September 16, 2015, Eydelman pleaded guilty to criminal charges arising from his role in an insider trading scheme that involved trading in advance of more than a dozen pending corporate transactions. He also agreed to settle related SEC charges. The SEC's complaint alleged that Eydelman traded on behalf of himself and dozens of clients based on information he received from Steven Metro, a Simpson Thacher law firm employee. Metro passed the information to Eydelman through a mutual friend and Eydelman brokerage customer, Frank Tamayo. Tamayo passed the material, nonpublic information he received from Metro to Eydelman via napkins or post-it notes at Grand Central Terminal. The illegal trading resulted in approximately $5.6 million in profits.

The SEC's complaint alleged that after receiving the tips from Metro, Tamayo typically met Eydelman near the clock at the information booth at Grand Central Terminal, and then chewed up or ate the post-it notes or napkins after using them to show Eydelman the ticker symbol of the company that would be acquired. The SEC alleged that Eydelman then returned to his office and typically gathered research about the target company, which he emailed to Tamayo to create a false paper trail with a justification for the trading. Eydelman then allegedly traded for himself, Tamayo, and other customers. Tamayo allegedly allocated a portion of his profits for eventual payment back to Metro in exchange for the inside information, and Metro also traded personally in advance of at least two deals.

Eydelman Tamayo, and Metro all pleaded guilty in connection with their roles in the scheme, and both Eydelman and Tamayo previously entered into settlements with the SEC pursuant to which each consented to being permanently enjoined from future violations of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rule 10b-5 and 14e-3 thereunder, as well as Section 17(a) of the Securities Act of 1933. Additionally, as part of their settlements with the SEC, Eydelman is required to disgorge $1,236,657 of his ill-gotten gains and pay a monetary penalty of $1,236,657, and Tamayo to disgorge more that $1 million of his ill-gotten gains. Eydelman was also barred from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally statistical rating organization; and barred from participating in any offering of a penny stock.

Metro was sentenced previously to 46 months, and Tamayo to a year and a day.

The SEC's litigation against Metro is ongoing. The SEC's complaint seeks disgorgement of ill-gotten gains plus prejudgment interest, financial penalties, and an anti-fraud injunction.

The SEC's investigation was conducted by Jason Burt and Carolyn Welshhans in the Enforcement Division's Market Abuse Unit with assistance from John Rymas, Mathew Wong, Daniel Koster, and Leigh Barrett. The case was supervised by Robert A. Cohen, Co-Chief of the Market Abuse Unit. The SEC's litigation is being led by Stephan Schlegelmilch. The SEC appreciates the assistance of the U.S. Attorney's Office for the District of New Jersey, Federal Bureau of Investigation, and Financial Industry Regulatory Authority.

For additional information, see Litigation Release Numbers 23302, 23391, 23646, and 23650.

 

http://www.sec.gov/litigation/litreleases/2016/lr23667.htm


Modified: 09/30/2016