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Justice News

Department of Justice
U.S. Attorney’s Office
District of New Jersey

FOR IMMEDIATE RELEASE
Wednesday, May 9, 2018

Former Law Firm Clerk Resentenced To 37 Months In Prison For Role In $2 Million Insider Trading Scheme

TRENTON, N.J. - The former managing clerk for an international law firm was resentenced today to 37 months in prison for stealing sensitive, confidential information from the law firm for use in a five-year insider trader scheme that yielded net profits of more than $2 million, U.S. Attorney Craig Carpenito announced.

Steven Metro, 44, formerly of Katonah, New York, was sentenced today to 37 months in prison. U.S. District Judge Michael A. Shipp imposed the sentence in Trenton federal court.

In November 2015, Metro pleaded guilty to the first two counts of an indictment charging him with securities fraud and conspiracy to commit securities and tender offer fraud, and was sentenced to 46 months in prison in September 2016.  Metro appealed his sentence to the U.S. Court of Appeals for the Third Circuit, which vacated Metro’s sentence in February 2018 and remanded the case to the District Court for resentencing after further factual findings pertaining to the total loss amount attributable to Metro.

According to documents filed in this case and statements made in court:

From 2009 to 2013, Metro stole material nonpublic information from Simpson Thacher & Bartlett LLP related to corporate transactions, such as mergers and acquisitions or tender offers, in which the firm represented a party or financial advisor to the transaction. As the firm’s managing clerk, Metro did not personally work on most of these transactions. Instead, Metro stole the inside information by scouring the firm’s computer system for client names and the keywords “merger agreement,” “bid letter,” “engagement letter,” and “due diligence.”

After obtaining the inside information, Metro would meet his friend, Frank Tamayo, 44, of Brooklyn, New York, at a bar, coffee shop, or other location near their respective workplaces in midtown Manhattan. During these meetings, Metro provided Tamayo material information pertaining to, among other things, the names and/or ticker symbols of the companies whose securities should be purchased. Tamayo would write the security’s ticker symbol on a small piece of paper or napkin and commit the rest of the inside information to memory.

Afterwards, Tamayo would meet Vladimir Eydelman, 46, formerly of Colts Neck, New Jersey, usually at a location near Eydelman’s workplace, such as at the large clock in New York City’s Grand Central Terminal. Tamayo would show Eydelman the paper or napkin with the ticker symbol of the company whose securities should be purchased. After Eydelman memorized the ticker symbol, Tamayo would place the paper or napkin into his mouth and chew it until it was destroyed.

After receiving the inside information provided by Metro, whom Eydelman knew as Tamayo’s “source,” Eydelman then purchased securities for himself, family members, friends, and clients, including Tamayo. Eydelman quickly sold the shares and covered any positions once the relevant deal was publicly announced and the stock price rose.  

Throughout the course of the approximately five-year scheme, Tamayo reinvested the approximately $7,000 in profits that Metro made on the first deal, and updated Metro on the running balance of his profits from the insider trading scheme. As of October 2013, by which time the conspirators had traded ahead of at least 13 planned corporate transactions, Metro’s share of the profits had reached approximately $168,000. Metro sought to “cash out” his share of the accrued profits from the insider trading scheme, pressing Tamayo to “liberate some cash” during a meeting in January 2014. Eydelman paid approximately $7,000 in cash to Tamayo in February 2014, with the expectation that Tamayo would use the cash to compensate his law firm source – i.e., Metro – for providing them the inside information.

By exploiting the information that Metro stole from the firm, Metro, Tamayo and Eydelman personally, or on behalf of close affiliates, such as family members, netted more than $2 million in illicit profits over five years.

In addition to the prison term, Judge Shipp sentenced Metro to three years of supervised release.

U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Gregory W. Ehrie in Newark, with the investigation.  He also thanked the U.S. Securities and Exchange Commission’s New York Regional Office, under the direction of Regional Director Marc P. Berger and Senior Associate Regional Director Sanjay Wadhwa, for its assistance

The government is represented by Assistant U.S. Attorney Shirley U. Emehelu, Chief of the Asset Recovery and Money Laundering Unit, Senior Litigation Counsel R. Joseph Gribko of the U.S. Attorney’s Office in Trenton, and Senior Litigation Counsel Barbara A. Ward of the Asset Recovery and Money Laundering Unit.

Defense counsel:  Lawrence S. Lustberg Esq., and Anne M. Collar Esq., Newark

Topic(s): 
Securities, Commodities, & Investment Fraud
Component(s): 
Press Release Number: 
18-164
Updated May 9, 2018