White Collar Crime News

Numerous people arrested for insider trading February 6, 2009

Joseph Contorinis, a former portfolio manager at Jefferies’asset-management unit  and Michael Koulouroudis have been arrested and charged with conspiracy and securities fraud.  Several other people have been arrested in this and other related cases including Nicos Achillea Stephanou, a UBS investment banker and Ramesh Chakrapani, a onetime Blackstone Group executive.

Prosecutors have alleged Stephanou worked on the acquisition of Albertson’s Inc. in 2006 and had access to nonpublic information. As a result, a hedge fund controlled by Contorinis allegedly reaped profits of $7.2 millionon trading in shares of Albertson’s.

In addition, Stephanou allegedly tipped others about a proposed acquisition of ElkCorp by a private-equity firm.  Thus, Koulouroudis also allegedly made profits of $138,000after he was tipped that ElkCorp had agreed to be acquired in December 2006. However, ElkCorp ultimately was acquired by Building Materials Corp. of America the next year.

I assume that more arrests will be coming at some point.  It is rare that these people (assuming they are guilty for a second) only get involved in one or two of these deals.  There are probably several more to be uncovered.  In one securities fraud case I had, it started with one case, led to a much  bigger one and then we received a subpoena for documents covering approximately 20 different companies that my client was associated with.  As a side note, my client was never charged as he called me when he got his first subpoena.

While you can prosecute these cases without an informant, it is much more difficult.  Thus, I assume they already have one.  If not, they’ll probably get one due to the amount of people they  arrested.  Someone is going to cut a deal sooner rather than later. 

Article is here.