Wall Street Professionals

Are you dreaming of become a Wall Street professional earning high salaries and bonuses? What do you think if in reality some of them are even more greedy and shameless than you can imagine?

SEC recently charged 14 defendants in an insider trading scheme that netted US$15m on thousands of illegal trades, using information stolen from UBS and Morgan Stanley.

UBS

Mitchel Guttenberg, an ED in UBS research department, provided material non-public information about upcoming UBS analyst upgrades and downgrades to two traders Eric Franklin and David Tavdy in exchange for sharing in the illicit profits from their trading on that information personally, for the hedge funds Franklin managed, and for the registered broker-dealers where Tavdy was a trader.

The traders had a network of downstream tippees, including another hedge fund, a day-trading firm and three registered representatives at Bear Stearns. Such illegal activities are hid through a clandestine meeting at Manhattan's famed Oyster Bar and eventually the use of disposable cell phones, secret codes and cash kickbacks.

Morgan Stanley

Randi Collotta, an attorney in Morgan Stanley's global compliance department, together with her husband Christopher Collotta (an attorney in private practice), provided material non-public information about upcoming corporate acquisitions involving Morgan Stanley's investment bank clients to Marc Jurman, a registered representative at a Florida broker-dealer. Jurman traded on that information and share his illicit profits with the Collottas.

Jurman also tipped Robert Babcock, a registered representative at Bear Stearns, who traded on that information and tipped Franklin, a hedge fund managed by Franklin, and another registered representative at Bear Stearns.


SEC made very severe comments on this insider trading scheme and stated that "we will do everything possible to make sure that, in addition to any other remedies or sanctions imposed, none of these individuals ever works in the securities industry again".

I am quite curious how SEC can unravel this scheme. Did they send a secret agent 007 to UBS and Morgan Stanley?