An owner of a New York-based advisory firm and his stockbroker are in trouble after they traded on confidential information provided by a tipsy lawyer working on a pharmaceutical merger.
The SEC charged Long Island-based Tibor Klien and former Ameriprise broker Michael Shechtman with securities fraud on Friday. Klien learned about Pfizer’s planned acquisition of King Pharmaceuticals through his friend, Robert M. Schulman, a D.C.-based partner with Hunton & Williams. According to the SEC, Schulman blurted out the information after several glasses of wine one weekend in August 2010.
Klien then took the information and shared it with Shechtman, who bought up thousands of shares for both of them. When King announced the merger, both sold out, making more than $400,000 combined through the scheme.
The regulator is seeking disgorgement of the illegally gained profits, damages and legal fees, as well as an order barring the two from the industry.
The former south Florida attorney Scott Rothstein has embroiled yet more parties in his net, four years after he admitted to running a massive $1.2 billion Ponzi scheme.
TD Ameritrade agreed to pay the SEC $15 million and $37.5 million to the Office of the Comptroller of the Currency to settle claims the Canadian bank failed to properly alert authorities to the suspicious activity in accounts linked to Rothstein’s scheme.
The regulator further claimed that a former regional vice president for the bank had misled investors, saying that Rothstein—who is now serving a 50-year prison sentence—had limited access, when in reality he could move unlimited amounts of money.
Under Monday’s settlement agreement, TD neither admitted nor denied the charges and agreed to pay the fine.