The US Securities and Exchange Commission on Tuesday announced new charges against individuals involved in "widespread and brazen" international schemes of serial insider trading that yielded at least $6.7 million of illicit gains.
According to the SEC, the schemes were orchestrated by two individuals — Eugene Plotkin, a research analyst in the Fixed Income division of Goldman Sachs, and David Pajcin, a former employee of Goldman Sachs.
As alleged in the SEC's complaint, in one scheme, Plotkin and Pajcin persuaded a mergers and acquisitions analyst at Merrill Lynch to provide tips on upcoming mergers in return for a share of the trading profits.
In another scheme, Plotkin and Pajcin recruited two individuals to obtain jobs at a printing plant in Wisconsin, steal advance copies of BusinessWeek magazine and tip Plotkin and Pajcin on the names of companies discussed favorably in the “Inside Wall Street” column before the magazine became public.
Plotkin and Pajcin traded on the inside information, initially in an account in Pajcin’s name and later, in accounts in the names of others in Europe and the United States. Plotkin and Pajcin also tipped several individuals in the United States and Europe in return for a share of their trading profits.
In total, Plotkin and Pajcin traded in at least 25 stocks within one year based on inside information obtained through these schemes. The Commission’s complaint charges 13 individuals in the United States and Europe for their roles in the scheme.
This complaint follows two prior complaints filed by the Commission in August 2005 charging insider trading in Reebok securities and successfully freezing over $6 million in trading proceeds.
Mark K. Schonfeld, Director of the Commission’s Northeast Regional Office, observed that:
“This fraud is one of the most widespread, varied, and premeditated insider trading rings we have ever prosecuted. The defendants sought out individuals working in our nation’s leading financial institutions hoping to get them to betray their employer, their clients, and the investing public.”
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