Prosecutors: Insider Trading Ring Busted
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NEW YORK (AP) – A husband and wife, both lawyers, and financial workers at the top rung of Wall Street’s hierarchy were united in crime as they made more than $15 million in illegal trading profits, resulting in criminal charges against 13 people, authorities said Thursday.
The attorneys, Randi Collotta, 30, who worked for Morgan Stanley & Co. Inc. in Manhattan, and her husband, Christopher Collotta, 34, who worked in private practice, were among those criminally charged in Federal District Court in Manhattan. Civil charges against 11 individuals and three entities were brought in a complaint filed by the Securities and Exchange Commission.
Authorities said nine people were taken into custody Thursday morning. They were expected to appear in federal court later in the day.
Linda Chatman Thomsen, director of the Division of Enforcement for the Securities and Exchange Commission, said in a statement that the case was “one of the most pervasive Wall Street insider trading rings since the days of Ivan Boesky and Dennis Levine” in the mid-1980s.
“What is so alarming about the conduct alleged in the SEC’s case isn’t just the scope of the scheme … but, sadly, who is at the center of it,” she said.
Defendants including registered representatives, attorneys, compliance personnel and hedge fund portfolio managers, improperly relied on hundreds of tips during five years of illegal trading, she said.
“And this conduct didn’t occur in obscure boiler rooms – but rather at what are commonly considered `top tier’ Wall Street firms,” Thomsen said.
Prosecutors said two insider trading schemes and two separate bribery schemes were part of the case that resulted in charges of securities fraud and commercial bribery.
The SEC said in a statement that the scheme involved unlawful trading ahead of upgrades and downgrades by UBS research analysts and corporate acquisition announcements involving Morgan Stanley’s investment banking clients.
The SEC said the ringleaders of the UBS part of the scheme went to great lengths to hide their illegal conduct with tactics including a clandestine meeting at Manhattan’s famed Oyster Bar and eventually the use of disposable cell phones, secret codes and cash kickbacks before the scheme unraveled.
