A Northern Westchester man who was the former managing clerk for an international law firm was resentenced for stealing sensitive, confidential information for use in a five-year insider trading scheme that yielded net profits of more than $2 million, U.S. Attorney Craig Carpenito announced.
Steven Metro, 44, formerly of Katonah, was sentenced Wednesday to 37 months in prison.
Metro pleaded guilty to the first two counts of an indictment charging him with securities fraud and conspiracy to commit securities and tender offer fraud In November 2015, and was sentenced to 46 months in prison in September 2016.
Metro appealed his sentence to the U.S. Court of Appeals for the Third Circuit, which vacated Metro’s sentence in February 2018 and remanded the case to the District Court for resentencing after further factual findings pertaining to the total loss amount attributable to Metro.
According to documents filed in this case and statements made in court:
- From 2009 to 2013, Metro stole material nonpublic information from Simpson Thacher & Bartlett LLP related to corporate transactions, such as mergers and acquisitions or tender offers, in which the firm represented a party or financial advisor to the transaction. As the firm’s managing clerk, Metro did not personally work on most of these transactions. Instead, Metro stole the inside information by scouring the firm’s computer system for client names and the keywords “merger agreement,” “bid letter,” “engagement letter,” and “due diligence.”
- After obtaining the inside information, Metro would meet his friend, Frank Tamayo, 44, of Brooklyn, at a bar, coffee shop, or other location near their respective workplaces in midtown Manhattan. During these meetings, Metro provided Tamayo material information pertaining to, among other things, the names and/or ticker symbols of the companies whose securities should be purchased. Tamayo would write the security’s ticker symbol on a small piece of paper or napkin and commit the rest of the inside information to memory.
- Afterward, Tamayo would meet Vladimir Eydelman, 46, formerly of Colts Neck, New Jersey, usually at a location near Eydelman’s workplace, such as at the large clock in New York City’s Grand Central Terminal. Tamayo would show Eydelman the paper or napkin with the ticker symbol of the company whose securities should be purchased. After Eydelman memorized the ticker symbol, Tamayo would place the paper or napkin into his mouth and chew it until it was destroyed.
- After receiving the inside information provided by Metro, whom Eydelman knew as Tamayo’s “source,” Eydelman then purchased securities for himself, family members, friends, and clients, including Tamayo. Eydelman quickly sold the shares and covered any positions once the relevant deal was publicly announced and the stock price rose.
- Throughout the course of the approximately five-year scheme, Tamayo reinvested the approximately $7,000 in profits that Metro made on the first deal, and updated Metro on the running balance of his profits from the insider trading scheme.
- As of October 2013, by which time the conspirators had traded ahead of at least 13 planned corporate transactions, Metro’s share of the profits had reached approximately $168,000.
- Metro sought to “cash out” his share of the accrued profits from the insider trading scheme, pressing Tamayo to “liberate some cash” during a meeting in January 2014. Eydelman paid approximately $7,000 in cash to Tamayo in February 2014, with the expectation that Tamayo would use the cash to compensate his law firm source – i.e., Metro – for providing them the inside information.
- By exploiting the information that Metro stole from the firm, Metro, Tamayo and Eydelman personally, or on behalf of close affiliates, such as family members, netted more than $2 million in illicit profits over five years.
In addition to the prison term, Metro was sentenced to three years of supervised release.
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