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Lawyers from elite Wall Street firms supplied confidential information to an insider trading ring that netted tens of millions of dollars in illicit profits over a decade, US federal prosecutors alleged in charges filed on Wednesday.
In two indictments unsealed in federal court in Boston, the lawyers and other financial services professionals were charged in connection with a decade-long insider trading scheme that allegedly stole and used confidential information about nearly 30 major transactions.
A total of 30 individuals were charged as part of the case. Lawyer information for the defendants was not immediately available.
The law firms involved in the scheme are not named but the deals about which the conspirators obtained information indicate top firms, including Latham & Watkins, Goodwin Procter and Wachtell Lipton, worked on the transactions.
The insider trading case, one of the biggest in recent times, strikes at the heart of dealmaking practices at Wall Street law firms, as advising on mergers and acquisitions has evolved into one of the most lucrative areas of corporate law.
The list of deals cited by prosecutors includes Cigna’s $54bn acquisition of Express Scripts and Johnson & Johnson’s $30bn takeover of biotech Actelion.
The indictment alleges that corporate attorney Nicolo Nourafchan, a 2011 graduate of Yale Law School who worked at three large firms, including Latham, misappropriated confidential deal information for use by the insider trading scheme. Prosecutors said Nourafchan obtained the information from document management systems and other lawyers but was not involved in working on all of the deals.
“Everyone charged today is accused of scoring significant profits from expected market moves and making out like bandits,” Ted Docks, special agent in charge of the FBI’s Boston division, said in a statement.
Nourafchan also allegedly brought in college classmate Robert Yadgarov to recruit other lawyers to provide tips on deals. Another co-conspirator not named in the indictment was involved in deals including Anadarko’s $55bn takeover of Occidental Petroleum and Tim Hortons’ $11bn buyout of Burger King, suggesting they were at Wachtell.
Wachtell said: “The responsible party left Wachtell Lipton over four years ago. There are no allegations of wrongdoing against the firm. Wachtell Lipton has co-operated fully with the US Attorney’s office and will continue to do so.”
Latham said the former associate involved has not been with the firm for five years, adding: “the conduct as alleged would reflect a serious violation of our robust policies and procedures”.
“We are deeply disappointed that a former employee is alleged to have violated the trust placed in him and misused confidential information as part of a broader criminal scheme affecting multiple law firms and their clients,” Goodwin said in a statement.
