Mergers and acquisitions professionals from UBS and Blackstone Advisory Service have been charged by US authorities with feeding confidential information to an insider trading ring that generated over $11.6 million.
The criminal and civil cases allege Nicos Achilleas Stephanou from UBS Investment Bank and Ramesh Chakrapani at Blackstone Advisory Services (both based in the UK) tipped five people with non-public information about three impending takeover deals.
The Securities and Exchange Commission (SEC) says the men leaked to five ring members, including Joseph Contorinis, a portfolio manager for Jefferies and friends and family, all of whom have been charged.
The SEC complaint alleges that between November 2005 and December 2006 the ring was fed insider information on bids for supermarket chain Albertson's, building products manufacturer ElkCorp and National Health Investors.
Stephanou had access to non-public information on Albertson's because one of the companies that eventually acquired it retained UBS as its financial advisor and he was a member of the advisory team.
The SEC says Stephanou tipped George Paparrizos, Michael Koulouroudis and Joseph Contorinis, who then caused the Jefferies Paragon Fund to buy over 2.6 million shares at a cost of $59 million.
The defendants made total profits and avoided losses of approximately $7.7 million from their trading in Albertson's, says the SEC.
A similar move involving ElkCorp made ring members around $300,000, whilst trading in National Health Investors netted $17,000, say the authorities.
In January the SEC filed a related complaint against Chakrapani alleging, among other things, that he tipped another friend about the Albertson's acquisition leading to around $3.6 million in illegal profits.
Scott Friestad, deputy director, division of enforcement, SEC, says: "The Commission and the public expect Wall Street professionals to act with the highest degree of ethics and integrity. It is unconscionable when these highly paid individuals abuse their access to sensitive information and enrich themselves at the expense of others."