Vladimir Eydelman, Insider Trading, New Jersey 2015

TRENTON, N.J. – Broker-dealer Vladimir Eydelman, 44, formerly of Colts Neck, New Jersey, was sentenced to 36 months in prison for participating in a five-year insider trading scheme that relied on information stolen from an international law firm and yielded net profits of more than $5.6 million.

Eydelman, who was employed by Oppenheimer & Co. and Morgan Stanley, repeatedly traded on material nonpublic information provided by his client, Frank Tamayo, 43, of Brooklyn, New York. Tamayo had obtained the inside information from his friend and former law school classmate, Steven Metro, 42, of Katonah, New York, who was the managing clerk of the New York office of Simpson Thacher & Bartlett LLP.

The inside information divulged by Metro to Tamayo and, in turn, by Tamayo to Eydelman, related to corporate transactions, such as mergers and acquisitions or tender offers, in which the law firm represented a party or financial advisor to the transaction. Metro stole the inside information from the firm by scouring its computer system using search terms such as “merger agreement,” “bid letter,” “engagement letter,” “due diligence,” as well as client names and client-matter numbers.

After obtaining the information, Metro divulged it to Tamayo in person, usually meeting at a bar, coffee shop, or other location near their respective workplaces in midtown Manhattan. During such meetings, Metro provided Tamayo inside information pertaining to, among other things, the names and/or ticker symbols of the companies whose securities should be purchased, the general timing of the planned deals, and information related to how the deals would affect the issuers’ stock price once announced.

Tamayo would meet with Eydelman, usually at a location near Eydelman’s workplace, such as under the large clock in New York City’s Grand Central Terminal, where Tamayo would pass it on to Eydelman. Tamayo would show Eydelman the paper or napkin on which Tamayo had written the ticker symbol of the company whose securities should be purchased. After Eydelman memorized the ticker symbol, Tamayo then would place the paper or napkin into his mouth and chew it until it was destroyed.

Eydelman purchased securities for himself, family members, friends, and clients, including Tamayo. Eydelman quickly sold the shares and covered any positions once the relevant deal was publicly announced and the stock price rose. Throughout the course of the five-year scheme, Tamayo reinvested the approximately $7,000 in profits that Metro made on the first deal and updated Metro on the running balance of his profits from the insider trading scheme. As of October 2013, by which time the conspirators had traded ahead of at least 13 planned corporate transactions, Metro’s share of the profits had reached approximately $168,000.

Eydelman previously pleaded guilty to one count of conspiracy to commit securities and tender offer fraud, one count of securities fraud, and one count of tender offer fraud. The scheme yielded net profits of more than $5.6 million, with Eydelman being the primary beneficiary of the scheme, netting over $3.7 million in profits. The scheme occurred between 2009 and 2013.

Defendant: Vladimir Eydelman, 44, formerly of Colts Neck, New Jersey

Criminal Charges: Conspiracy to commit securities and tender offer fraud, securities fraud, and tender offer fraud

City and State: Trenton, New Jersey

Exact Date: None specified

Sentence: 36 months in prison

Dollar Amounts: More than $5.6 million in net profits, with Eydelman netting over $3.7 million

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