Today the SEC filed a complaint alleging a massive insider-trading scheme involving, among others a former Lehman Brothers employee and Eric Holzer, who the complaint describes as “a tax associate in the New York City office of an international law firm.”
Holzer is an an associate with Paul Hastings in New York. In a statement, the firm said, “We learned today of allegations brought against an associate of the firm, which have no connection to any firm or client matters. We will fully cooperate with the authorities in any investigation.” According to this early WSJ report, Holzer, 34, was arrested by the FBI at his residence this morning.
Here’s the complaint, which begins:
Over a four year period, from at least March 2004 through July 2008, Matthew C. Devlin, then a registered representative at Lehman Brothers, Inc. (”Lehman”) in New York City, traded on and tipped at least four of his clients and friends with inside information about 13 impending corporate transactions. Some of Devlin’s clients and friends, three of whom worked in the securities or legal professions, tipped others who traded in the securities. In all, the illicit trading yielded over $4.8 million in profits.
Attempts to reach Matthew Devlin were unsuccessful.
The complaint alleges that Matthew Devlin misappropriated the confidential non-public information about the transactions from his wife. “As a reflection of the value of the inside information that Devlin provided,” says the complaint, some of the defendants “referred to Devlin and his wife as the ‘golden goose.’” Ms. Devlin is a partner in Brunswick, a firm that does public relations for M&A deals.
In a statement, a Brunswick spokeswoman said: “The husband of a Brunswick employee has been arrested by U.S. authorities for using information obtained illegally from her, and without her knowledge, which he has then passed to third parties. It is our understanding that the information, which relates to a limited number of her clients, was obtained by being in close proximity to his wife and from the implications of her travel schedule.”
James J. Benjamin, Jr., partner in the law firm of Akin Gump, who’s counsel for Ms. Devlin, says:
“Nina Devlin is devoted to her clients and colleagues and has always sought to uphold the highest standards of professionalism in her work. She was completely unaware that confidential information about her job was being used as the basis for securities trading. She is devastated by this terrible situation.”
The complaint alleges that the defendants — nine individuals and three investment companies — traded with inside information about impending transactions, including Alcoa’s 2007 tender offer for Alcan, Electronic Arts’ 2008 tender for Take-Two and InBev’s 2008 tender offer for Anheuser-Busch.
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