A LAWYER and a trader were accused by federal prosecutors of running a 17-year conspiracy to trade on corporate merger secrets stolen from three of the nation’s most powerful law firms, in one of the largest US insider trading cases on record.
Prosecutors accused Matthew H. Kluger and Garrett D. Bauer of reaping more than $32.2m (£19.6m) from trades on tips about upcoming mergers and acquisitions that Kluger learned as a lawyer at Wilson Sonsini Goodrich & Rosati, the pre-eminent firm representing Silicon Valley technology companies.
The complaint details a conspiracy that had its origins in Atlantic City, New Jersey, and ended with attempts by the defendants to cover their tracks, including a discussion about cleaning money in a washing machine to rid it of fingerprints.
Kluger also regularly leaked information he learned when he worked previously at two other law firms, Cravath Swaine & Moore LLP and Skadden, Arps, Slate, Meagher & Flom LLP, prosecutors said. Yesterday’s charges do not cover any trades that may have been made at that time.
Federal prosecutors said Kluger passed tips to an unnamed co-conspirator about mergers, such as Oracle’s takeover of Sun Microsystems, Adobe Systems’ purchase of Omniture, Hewlett-Packard’s takeover of 3Com and Intel’s purchase of McAfee. The co-conspirator would then tip Bauer, 43, who would make trades for all three based on the tips, according to the complaint.
City A.M. Reporter