Richard Tafoya
Mar 1st, 2007, 09:46 PM
LA Times:
http://www.latimes.com/business/la-ex-insider1mar02,0,4477190.story?coll=la-home-headlines
In 2001, Wall Street executive Mitchel Guttenberg sat down with his friend, Erik Franklin, in New York City's famed Oyster Bar to discuss repaying a $25,000 loan.
But instead of giving him cash, Guttenberg offered a currency that can be even more valuable on Wall Street: inside information about dozens of stock analyst recommendations at his firm, financial-services powerhouse UBS.
Thus began what regulators described today as the most pervasive insider-trading scandal to course through Wall Street since the days of Ivan Boesky and Dennis Levine in the late 1980s.
That scheme -- and another at Morgan Stanley that was also disclosed today -- encompassed 14 people, four major Wall Street firms, several hedge funds and more than $15 million in illicit profits over a four-year period, according to federal authorities.
...
In their case, Guttenberg and Franklin allegedly went to elaborate lengths to conceal their activity, using such dodges as disposable cell phones, coded text messages and clandestine meetings.
And, authorities said, there proved to be no honor among thieves, as several people who caught wind of the insider trading launched mirror trades of their own, and two people went so far as to blackmail the original perpetrators by threatening to expose them.
Taken together, the schemes also involved trading on initial public stock offerings and on red-hot mergers and acquisitions, including the 2005 buyout of California health insurer PacifiCare Health Systems Inc.
http://www.latimes.com/business/la-ex-insider1mar02,0,4477190.story?coll=la-home-headlines
In 2001, Wall Street executive Mitchel Guttenberg sat down with his friend, Erik Franklin, in New York City's famed Oyster Bar to discuss repaying a $25,000 loan.
But instead of giving him cash, Guttenberg offered a currency that can be even more valuable on Wall Street: inside information about dozens of stock analyst recommendations at his firm, financial-services powerhouse UBS.
Thus began what regulators described today as the most pervasive insider-trading scandal to course through Wall Street since the days of Ivan Boesky and Dennis Levine in the late 1980s.
That scheme -- and another at Morgan Stanley that was also disclosed today -- encompassed 14 people, four major Wall Street firms, several hedge funds and more than $15 million in illicit profits over a four-year period, according to federal authorities.
...
In their case, Guttenberg and Franklin allegedly went to elaborate lengths to conceal their activity, using such dodges as disposable cell phones, coded text messages and clandestine meetings.
And, authorities said, there proved to be no honor among thieves, as several people who caught wind of the insider trading launched mirror trades of their own, and two people went so far as to blackmail the original perpetrators by threatening to expose them.
Taken together, the schemes also involved trading on initial public stock offerings and on red-hot mergers and acquisitions, including the 2005 buyout of California health insurer PacifiCare Health Systems Inc.