Man who Chewed Up Insider Trading Tips Settles with SEC

Man who Chewed Up Insider Trading Tips Settles with SEC

Washington (Reuters) - A Brooklyn, New York man, who passed stock trading tips on napkins and Post-it notes at meetings in Grand Central Terminal before swallowing the evidence, has reached a civil settlement with the U.S. Securities and Exchange Commission.

The SEC said on Monday Frank Tamayo was unlikely to owe a civil penalty after providing "extensive cooperation" in its investigation against his alleged accomplices, former MorganStanley stockbroker Vladimir Eydelman and law firm clerk Steven Metro.

Tamayo, a mortgage broker, pleaded guilty last September to criminal insider trading charges over the alleged $5.6 million scheme.

Eydelman agreed in January to plead guilty, but has yet to formally do so, court records show.

Under Monday's settlement, which requires court approval, Tamayo would forfeit more than $1 million of illegal gains, but the payment would likely be excused because he agreed to a similar payment as part of his criminal plea.

"Tamayo benefited from his decision to cooperate promptly with the SEC," said Robert Cohen, co-deputy chief of the SEC enforcement division's market abuse unit.

A lawyer for Tamayo did not immediately respond to a request for comment.

Lawyers for Eydelman, of Colts Neck, New Jersey, and Metro, of Katonah, New York, did not immediately respond to similar requests.

Tamayo was the alleged middleman in a more than four-year insider trading scheme with Eydelman and Metro, a former law school classmate and managing clerk at the prestigious law firm Simpson Thacher & Bartlett.

Prosecutors said Metro passed tips to Tamayo about the firm's clients at Manhattan bars or coffee shops.

Tamayo would then allegedly meet Eydelman near the main clock in Grand Central Station, show him a ticker symbol to memorize, and then chew, or occasionally swallow, the napkin or Post-it containing the tip.

Authorities said the fraud allegedly started in 2009, and Tamayo began recording conversations with his accomplices in early 2014.

Eydelman and Metro were later fired by their respective employers. Neither Morgan Stanley nor Simpson Thacher was accused of wrongdoing.

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