Securities Exchange Commission charges 14 securities firm staff with insider trading
02 Mar 2007
New York: Fourteen current and former employees of US securities firms UBS Securities, Morgan Stanley and Bear Stearns, have been charged with what has been described as one of the most pervasive insider-trading schemes that enabled them to earn $15 million in illicit profits.
The Securities and Exchange Commission (SEC) yesterday said that those charged include eight securities and three hedge funds personnel, two broker-dealers and one in a day-trading firm.
The SEC has charged them for allegedly serially trading on material, non-public information provided in exchange for cash kickbacks, by insiders at UBS Securities and Morgan Stanley and Company.
The complaint alleges that in the first scheme, in operation since 2001, millions of dollars of illicit profits were made through thousands of illegal trades using inside information misappropriated by a UBS executive to trade ahead of UBS analyst recommendations.
The commission says that from 2001 through 2006, the conspirators communicated non-public information concerning forthcoming UBS analyst upgrades and downgrades, through coded text messages on disposable cell phones.
The SEC says that in the second scheme, several securities industry professionals and a hedge fund made dozens of illegal trades and earned hundreds of thousands of dollars in illicit profits using inside information misappropriated by an attorney at Morgan Stanley to trade ahead of M&A announcements.
Collectively, the complaint alleges, the defendants made at least $15 million in illicit profits from these two insider.