Thursday, January 10, 2008

Another Harvard Grad in the Slammer

The Financial Times remarked on the crackdown of insider trading that resulted in the sentencing of Goldman Sachs & Co. associate Eugene Plotkin, another Goldman Sachs employe, a Merrill Lynch analyst, a federal grand juror, and two employees of a printing firm in Wisconsin who who furnished pre-publication copies of Business Week’s “Inside Wall Street.

FT says that while certain colourful schemes such as the one hatched by Mr Plotkin were fairly easy for the government to spot, insider trades by sophisticated Wall Street groups such as hedge funds remained much harder to uncover.

Eugene Plotkin, 28, a former associate at Goldman Sachs & Co., was sentenced to 57 months in federal prison last week after his August 2007 plea of guilty to a series of insider trading schemes that netted more than $6.7 million in illegal gains that benefited Plotkin and five other conspirators, according to the U.S. Attorney’s office.

Plotkin was also fined $10,000 and ordered to forfeit the proceeds from the schemes.
Associated with him in the network were David Pajcin, another Goldman Sachs employee; Stanislav Shpigelman, a Merrill Lynch analyst; Jason Smith, a federal grand juror in New Jersey who provided information about a Bristol-Myers Squibb investigation; Nickolaus Shuster and Juan Renteria, two employees of a Wisconsin printer who furnished pre-publication copies of Business Week’s “Inside Wall Street” column, according to Southern District U.S. Attorney Michael Garcia.

Shpigelman was sentenced to 37 months and Smith was sentenced to 33 months in prison. Shuster, Renteria and Pajcin are awaiting sentencing. Paigin will be sentenced Jan 18. Goldman Sachs and Merrill Lynch, both headquartered in Lower Manhattan, were not charged in the case.

FT: Plotkin was a one-time competitive ballroom dancer. And Harvard graduate. The New Jersey postal working serving as a grand juror supplied tips about a government investigation into Bristol-Myers Squibb, the drugs company. Prosecutors said. Mr Plotkin also tried to enlist strippers to glean information from investment bankers about pending merger deals.

The scheme, hatched in a Russian day spa, was said by the government to include illegal trades on pending deals, including Adidas's acquisition of Reebok International in 2006.

Fun reading: A Merrill Lynch Analyst, A Postal Worker, Business Week Employees and An Exotic Dancer - That Equals Nearly Five Years by Chuck Gallagher Business Ethics Speaker.

Dealbreaker calls it the "best insider trading scandal of 2006." "We call it the best not because it worked that well—that might be interpreted as encouraging effective wrong-doing—but because it involved steam rooms in Russian bath houses, central European dead drop grandmothers, strippers and the classic “let’s steal Business Week” move. It’s like Wall Street meets Eastern Promises."

From the Los Angeles Times: Other insider trading convictions include: An ex-Morgan Stanley vice president and her husband, a former ING Groep analyst, were sentenced to 18 months in prison for trading on confidential news. Employees from Bear Stearns Cos. and Credit Suisse Group have been convicted or accused of trading on inside information.

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