U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23391 / October 23, 2015
Securities and Exchange Commission v. Vladimir Eydelman, Civil Action No. 3:14-cv-05844-MAS-TJB
SEC Announces Settlement with Stockbroker in Grand Central Post-It Notes Insider Trading Case
The Securities and Exchange Commission today announced a settlement with a stockbroker previously charged with insider trading in advance of more than a dozen pending corporate transactions in which illegal tips were passed via napkins or post-it notes at Grand Central Terminal.
The SEC last year charged Vladimir Eydelman, a former stockbroker employed by Oppenheimer & Co. and later by Morgan Stanley, in a scheme involving the passing of material, nonpublic information obtained by Steven Metro, a law firm employee, regarding pending corporate transactions involving clients of the firm. Metro allegedly passed the information to Eydelman through a mutual friend, Frank Tamayo, who settled a separately filed SEC complaint. The SEC alleged that after receiving the tips from Metro, Tamayo typically met Eydelman near the clock at the information booth at Grand Central Terminal and chewed up or ate 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 following this exchange Eydelman returned to his office and typically gathered research about the target company, which he then 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.
In the proposed final judgment, which is subject to court approval, Eydelman would be ordered to disgorge his ill-gotten gains of $1,236,657 but that payment would be deemed satisfied by the entry of orders of forfeiture or restitution in the parallel criminal case, in which he has pled guilty. Eydelman also would be ordered to pay a civil penalty of $1,236,657 and prejudgment interest, and be 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.
The SEC's case against Metro is ongoing. The SEC seeks disgorgement of ill-gotten gains plus prejudgment interest, financial penalties, and an injunction against him.
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 Number 23302.