Katonah Law Clerk Charged In $5.6 Million Insider Trading Scheme

KATONAH, N.Y. – A Katonah man is charged in a $5.6 million insider trading case of stealing non-public information about pending mergers from his law firm and passing it onto others who used it to trade for themselves and on behalf of their customers.

The U.S. Securities and Exchange Commission have charged Steven Metro and Vladimir Eydelman with insider trading.
The U.S. Securities and Exchange Commission have charged Steven Metro and Vladimir Eydelman with insider trading. Photo Credit: U.S. Securities and Exchange Commission
Photo Credit: U.S. Securities and Exchange Commission

Steven Metro worked at Simpson Thacter & Bartlett LLP, an international law firm that offers legal advice to many companies considering corporate transactions or acquisitions.

During three and a half years of activity, Metro would tip off a middleman, who is a cooperating witness in the case, to corporate transactions taking place with clients of his firm, according to the complaint the Securities and Exchange Commission filed with New Jersey prosecutors. 

The middleman then passed that information to Vladimir Eydelman, a stockbroker, by showing him a post-it note or napkin on which he wrote the stock ticker symbol of the company to be acquired, according to the complaint. The middleman would then chew up, and sometimes eat the note to destroy the evidence. They most often met at Grand Central Station.

After the middleman told Eydelman the price and timing of the deal, Eydelman would create a paper trail of false emails of research on the company and why buying the stock made sense to serve as a basis for the illegal trading, according to the complaint.

Of the 13 transactions the SEC says it received insider information for, Edyleman traded himself and on behalf of 50 clients in all 13, the middleman traded in at least 12, and Metro traded in at least two, according to the complaint.

But, the SEC says Metro also received a portion of the middleman’s profits, which totaled $168,000 and were kept in the middleman’s brokerage account. Some of Metro’s allotment was used to trade when he tipped the middleman off to new deals involving his company’s clients.

“As the scheme continued, Metro’s portion of the illict profits in the middleman’s brokerage account grew,” according to the complaint.

Altogether, the scheme yielded $5.6 million in illegal profits to Metro, Eydelman and the middleman, and their families, friends and Eydelman’s customers. 

The SEC charged Metro and Edelyman with insider trading Wednesday. The U.S. Attorney's Office for the District of New Jersey also announced criminal charges, including conspiracy to commit securities fraud, securities fraud and tender offer fraud.

“We are continuing to combat serial insider trading schemes, particularly by law firm employees and other professionals who are entrusted with extremely sensitive market-moving information," said Daniel M. Hawke, chief of the SEC Enforcement Division’s Market Abuse Unit.

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