FBI agents on Wednesday busted two Wall Street men on charges they made $5.6 million from an insider-trading scheme that at times read like pulp fiction — with illegal tips swapped under the clock at Grand Central Terminal and chewing on pieces of paper evidence to destroy them.
One of the men, Steven Metro, 40, the managing clerk at a Manhattan law firm, got tips on 13 mergers from lawyers at the firm and then handed them off to a mortgage broker pal who met a New Jersey broker at the famed train terminal, according to the charges brought by the US Attorney in Newark, NJ.
The broker, Vladimir Eydelman, 42, of Colts Neck, the second man charged in the alleged scam, would then receive the tips — ticker symbols of companies that were targets of still-secret takeover plans — which were written on a piece of paper or a napkin, and buy shares in those companies, according to the charges.
Eydelman worked at Oppenheimer and then Morgan Stanley.
The charges, which included the takeover of Office Max by Office Depot, include conspiracy to commit securities fraud and multiple counts of securities fraud.
Eydelman was the big winner in the scheme, according to the government. He used the profits to buy a 2011 Maserati GranTurismo for $117,700, and spent tens of thousands of dollars on expensive jewelry, the complaint said.
He also used the proceeds to buy a house and pay off the mortgage, it is alleged.
Metro, who works for Simpson Thacher and is now on leave, began the scheme in February 2009, in a bar, where he took aside his pal to suggest offering him tips about upcoming deals, the government charged.
The pal, who has become the government’s confidential informant, began meeting with Metro at coffee shops to get his tips and write them down on paper or napkins, the complaint alleges.
The confidential informant, who is not charged, would then meet Eydelman at Grand Central to hand off the information, the complaint said.
The informant would show Eydelman a ticker sign, then “fold up the paper or napkin with the ticker symbol(s) written on it, place it into his mouth and chew the paper or napkin to destroy it,” it is alleged.
Morgan Stanley does not tolerate insider trading and will “cooperate fully” with the FBI probe, a spokesman said.
“We strongly condemn any form of insider trading activity” and “will continue to cooperate with regulatory authorities in the investigation of these allegations,” said Stefan Prelog, an Oppenheimer spokesperson.
Eydelman and Metro each face 25 years in prison.