DOJ charges 13 in insider trading schemes

[JURIST] Thirteen defendants have been charged [press release, PDF] "with participating in two massive insider trading schemes and in two separate bribery schemes" that netted more than $8 million dollars in illegal profits for themselves and the hedge funds with which the defendants were affiliated, the US Attorney's Office for the Southern District of New York and the New York Field Office of the Federal Bureau of Investigation [official websites] announced Thursday. Ten indictments and criminal informations have been unsealed, which include allegations that Mitchel Guttenberg, executive director and institutional client manager at UBS AG [corporate website], sold two co-defendants material, nonpublic information regarding upcoming upgrades and downgrades in UBS analysts' securities recommendations, which often had a direct effect on the trading price of stock prices. Randi Collotta, former in-house counsel at the global compliance division of Morgan Stanley [corporate website], is alleged to have provided material, non public information regarding certain public companies' planned merger and acquisition activities. A broker at Banc of America Securities [corporate website] is alleged to have accepted cash kickbacks to allocate public offering shares to a hedge fund. Four defendants have pleaded guilty to conspiracy, securities fraud, and commercial bribery charges. Guttenberg, if convicted, faces a maximum prison term of 90 years.

Morgan Stanley agreed to pay a $10 million settlement [JURIST report] to the Securities and Exchange Commission [official website] last June without admitting or denying allegations made by the SEC that the corporation had failed to protect against potential misuse of insider trading information as required by law. AP has more.

 

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