I’ve read a lot of Securities and Exchange Commission complaints over the years and, every once in a while, one stands out.
The Commission’s March 24th complaint against Igor Poteroba, an investment banker who worked in the UBS Securities Global Healthcare Group is one such document. Filed in U.S. District Court for the Southern District of New York, the SEC claims the defendant tipped off a friend about upcoming mergers, acquisitions and business combinations in the pharmaceutical industry.
In SEC-speak, he passed on “material, non-public information.”
The friend who received that information worked in the securities business, and made stock and options trades based on the tips. The clandestine trading netted the participants more than $1 million in illicit profits, the SEC says.
What’s interesting, and a bit different, about this filing is the details the Commission brings forth about the scheme. It notes the two primary participants used coded e-mails that referred to the securities as “frequent flyer miles” or “bonus miles.”
Other codes were also in play, according to the filing. For example, in discussing the need to purchase shares of one firm in advance of a public announcement, the defendant wrote, “Let me know if you’ve started your wedding registry at Macy’s” and “Happy to talk about sales items and etc. . . . sale ends soon . . . so hurry up.”
Normally, SEC filings don’t make good light reading. This one’s the exception so check it out here.
(03/26/10)