"Once upon a time, there was a Pops searching for Truffles in the Forest". So goes the subject line of an email message sent in 2012. No, it wasn’t sent by Martha Stewart, who is also rumored to like truffles. It wasn’t sent by a would-be poet or children’s book author, either.
But it was insider trading.
The message contained an attachment with confidential data stolen from a company’s computer system and bearing information on Onyx Pharmaceuticals, which acquired one year later by Amgen for $10.4 billion.
The author of the message, Darina Windsor (Popsy), and her boyfriend, Benjamin Taylor (Pops), both worked as junior investment bankers in London.
Taylor left New York-based investment banking firm Moelis in 2015, and Windsor was fired by Centerview in 2016 for 'misconduct'; but Taylor allegedly continued to receive insider information after that. Both used their computer access, sending encrypted messages with mentioned nicknames, to obtain significant non-public information that Taylor would later sell to investors.
According to the U.S. Attorney's office, Taylor and Windsor received more than $1 million in cash, trips, expensive watches, designer clothes, and other luxuries in exchange for the information they peddled. The indictment says that the couple sold inside information about 22 companies between late 2012 and early 2018.
The Securities and Exchange Commission (SEC) complaint says that Taylor directly tipped off London and Monaco resident Joseph Abdul Noor El-Khouri and another unnamed trader who, combined, traded on upwards of at least 15 different acquisition announcements.
El Khouri allegedly used the information to net over $2 million in illicit profits by trading Contracts for Difference and spread bets based on securities for at least six U.S. companies that were about to be acquired.
El Khouri was arrested in the UK on 23 October 2019, while Taylor and Windsor remain at large.
However, the charges against the three are part of a federal probe into three other investors who have netted tens of millions of dollars by making trades before deal news breaks.
“The insider trading charges announced today lay bare a long-running international scheme stretching over the course of years, whose participants earned tens of millions of dollars in illicit profits from illegally trading on stolen inside information,” Deputy U.S. Attorney Audrey Strauss said.
Related: Wall Street Unfazed By Recession Fears
The charged include Goldman Sachs investment banker Bryan Cohen, accused of passing confidential information to a securities trader in Switzerland, and Georgios Nikas, a securities trader who also owns a chain of Greek restaurants in New York. A sixth figure charged is Telemaque Lavidas, the son of a member of the board of directors of Ariad Pharmaceuticals.
Nikas and Lavidas were also indicted earlier this month or their involvement in a plan to steal non-public information about Ariad Pharmaceuticals from Lavida’s father. Nikas also remains at large.
All six defendants face multiple counts of conspiracy, wire fraud and securities fraud, which carries a maximum 25-year prison term.
The charges are a particular embarrassment for Goldman Sachs since Cohen is the third of its bankers charged with insider trading in the past year and a half.
Woojae "Steve" Jung was sentenced to three months in prison in June for earning illegal profits by trading on proprietary information about some of Goldman's clients.
Last year, a former Goldman analyst Damilare Sonoiki pleaded guilty to leaking tips about upcoming mergers to an NFL linebacker in exchange for tickets.
As for Cohen, he is charged with receiving compensation of $2.6 million for leaking information to an unnamed trader about upcoming takeover bids for Swiss agrochemical provider Syngenta in 2015 and Buffalo Wild Wings in 2017.
By Michael Kern for Safehaven.com
More Top Reads From Safehaven.com:
