The Securities and Exchange Commission on Friday charged a Brooklyn man with facilitating a $5.6 million insider trading scheme that typically involved the passing of illegal tips via napkins or post-it notes at Grand Central Terminal in New York City.
Earlier this year, the SEC charged a stockbroker and a law firm managing clerk with insider trading and alleged they were connected by a mutual friend who served as a "middleman" in an effort to keep the two unlinked.
The SEC said Friday that it had filed a complaint in U.S. District Court for the District of New Jersey, in which the agency identifies Frank Tamayo as that middleman.
The SEC alleges that Tamayo received material nonpublic information from the clerk, Steven Metro, about 13 impending corporate deals involving clients of the law firm where Metro worked.
Says the SEC: "Tamayo then tipped his stockbroker Vladimir Eydelman, who used the confidential information to illegally trade for himself and for Tamayo and other customers. Tamayo allocated a portion of his ill-gotten profits for eventual payback to Metro for the inside information."
Robert Cohen, co-deputy chief of the SEC Enforcement Division's Market Abuse Unit, said in a statement that "as the middleman, Tamayo was the firewall between Metro and Eydelman. Metro had the information, Eydelman did the trading, and Tamayo kept them apart. But they were wrong in believing that this would stop the SEC from detecting their scheme."
In a parallel action, the U.S. Attorney's Office for the District of New Jersey today announced criminal charges against Tamayo. The U.S. attorney previously brought criminal actions against Metro and Eydelman. Those criminal cases and the SEC's civil case against Metro and Eydelman are pending.
