A pair of corporate lawyers were at the centre of a global insider trading scheme that allegedly generated tens of millions of dollars in illicit profits by trading ahead of pending mergers and acquisitions (M&A), U.S. authorities say.
On Wednesday, the U.S. attorney’s office for the District of Massachusetts announced criminal charges against 30 people — and, in a parallel action, the U.S. Securities and Exchange Commission (SEC) filed charges against 21 people — alleging that that they were involved in an insider trading scheme that stretched over a decade, starting in 2014, using information that was misappropriated from various global law firms.
The criminal defendants include corporate lawyers and other financial professionals that U.S. authorities allege were recruited as sources of material inside information about forthcoming corporate transactions — including the merger of Tim Hortons and Burger King to create Restaurant Brands International in 2014.
A pair of attorneys — Nicolo Nourafchan and Robert Yadgarov — allegedly paid kickbacks for that inside information, which they then distributed to a network of traders and middlemen that were allegedly used to try to obscure the connections between the sources and the traders.
In total, it’s alleged that traders located in the U.S. and overseas traded ahead of at least 30 M&A deals, using brokerage accounts held by shell companies, offshore accounts and accounts controlled by co-conspirators.
In a pair of separate indictments, 21 defendants were charged with two counts of securities fraud, two counts of conspiracy to commit securities fraud and one count of money laundering. Additionally, certain defendants are facing charges of obstruction and making false statements to law enforcement, and nine others are also charged with securities fraud conspiracy.
The SEC’s complaint also charges 21 defendants for allegedly violating federal securities laws. It’s seeking disgorgement, civil penalties and injunctive relief.
None of the allegations have been proven, and the defendants are presumed to be innocent of the criminal charges.
So far, 19 defendants have been arrested, and two others that live in Russia and Israel are considered to be fugitives.