U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21460 / March 25, 2010
Securities and Exchange Commission v. Igor Poteroba, Aleksey Koval, Alexander Vorobiev, and Relief Defendants Tatiana Vorobieva and Anjali Walter, Civil Action No. 10-civ-2667 (AKH) (S.D.N.Y. March 24, 2010)
SEC Charges Wall Street Investment Banker and Securities Industry Professional with Serial Insider Trading Scheme
The Securities and Exchange Commission charged Igor Poteroba, an investment banker at a global financial institution, Aleksey Koval, a securities industry professional, and their friend, Alexander Vorobiev, in a serial insider trading scheme that profited from highly confidential merger and acquisition information. The defendants, all Russian citizens, repeatedly tipped and/or traded on misappropriated inside information to obtain approximately $1 million in illicit profits.
According to the SEC's Complaint, filed yesterday in federal district court in Manhattan, from at least July 2005 through the present, Poteroba, an investment banker in UBS Securities LLC's Global Healthcare Group in New York City, misappropriated from UBS highly confidential inside information about at least eleven impending acquisitions, tender offers, or other business transactions. UBS had been retained as a financial adviser in ten of these transactions, and had been confidentially solicited as a source of capital in the eleventh. The Complaint alleges that, in advance of each transaction, Poteroba tipped his friend and financial professional, Koval (a/k/a Alexei Koval), with inside information concerning the impending transaction. After receiving the inside information, Koval traded on all the deals and tipped Vorobiev, a friend of both Koval and Poteroba, who traded on four of the deals. Based on the information tipped by Poteroba, Koval and Vorobiev traded in stocks and options of the companies targeted for acquisition.
According to the SEC's Complaint, the scheme began in at least July 2005 when Koval and Vorobiev traded in advance of the acquisition of Guilford Pharmaceuticals Inc. by MGI Pharma, Inc. Using, among other means of communication, coded email messages that referred to securities as "frequent flier miles" and "bonus miles," Poteroba urged Koval to purchase Guilford securities prior to the public announcement of the Guilford acquisition.
With respect to subsequent transactions, the SEC's Complaint alleges that Poteroba also supplied information to Koval using coded email messages that referred to securities or money as Macy's wedding registry gifts or "potatoes." For example, in discussing the need to purchase Molecular Devices Corporation securities prior to the imminent public announcement of its merger, Poteroba wrote to Koval, "Let me know if you've started your wedding registry at Macy's" and "Happy to talk about sales items and etc. . . . sale ends soon . . . so hurry up."
The SEC's Complaint further alleges that, during the course of the scheme, Koval used his home computer or cell phone to access and to trade in Vorobiev's on-line brokerage account. Koval also made cash withdrawals from Vorobiev's bank account using automated teller machines in Pasadena, California and Chicago, Illinois. In addition, Koval and Vorobiev conducted insider trading through brokerage accounts held in their own names. The Complaint also alleges that certain of the insider trading was also conducted through brokerage accounts held in the names of Tatiana Vorobieva, Vorobiev's wife, and Anjali Walter, Koval's wife, and portions of the proceeds from the illicit trading were received by Vorobieva and Walter. Accordingly, Vorobieva and Walter are named as relief defendants in this action to recover investor assets now in their possession.
According to the SEC's Complaint, Poteroba misappropriated material, nonpublic information from UBS and illegally tipped Koval regarding: (1) Guilford Pharmaceuticals, Inc.; (2) ID Biomedical Corp.; (3) Molecular Devices Corp.; (4) ViaCell, Inc.; (5) Mindray Medical International Limited (trading was in Datascope Corp.); (6) Millennium Pharmaceuticals, Inc.; (7) Sciele Pharma, Inc.; (8) Indevus Pharmaceuticals, Inc.; (9) Advanced Medical Optics, Inc.; and (10) PharmaNet Development Group, Inc. In addition, Poteroba misappropriated and illegally tipped inside information that UBS obtained when it was solicited by Vestar Capital to provide funding for its proposed acquisition of Radiation Therapy Services, Inc.
The SEC's complaint charges the Defendants with violating Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10-b5 thereunder, the general antifraud provisions of the federal securities laws, and Section 14(e) of the Exchange Act and Rule 14e-3 thereunder, the tender offer fraud provisions. The Commission seeks permanent injunctive relief, disgorgement of illicit profits with prejudgment interest, and the imposition of financial penalties against Poteroba, Koval, and Vorobiev, and disgorgement of illicit profits with prejudgment interest from the Relief Defendants. Today, the court issued an emergency order temporarily freezing the assets of the Defendants and Relief Defendants.
The SEC thanks the U.S. Attorney's Office for the Southern District of New York, the Federal Bureau of Investigation, and FINRA for their cooperation and assistance in connection with this matter. The SEC acknowledges the assistance of the Ontario Securities Commission. The SEC also acknowledges the cooperation of UBS Securities LLC.
See Also: SEC Complaint