An executive at UBS and a former lawyer at Morgan Stanley were charged with conspiracy and securities fraud Thursday for allegedly passing information about pending stock-rating changes and merger announcements to hedge funds and other accomplices, who then traded on the tips. In all, the insider-trading schemes involved 13 defendants who made more than $8 million in illegal profits, the U.S. Attorney for the Southern District of New York said in a news release describing the indictments.
An official from the Securities and Exchange Commission, which filed related civil charges on Thursday, called the alleged stock-tipping scheme “one of the largest S.E.C. insider trading cases against Wall Street professionals since the days of Ivan Boesky and Dennis Levine.”
“It involves fraud by employees of some of the biggest brokerage and investment banking firms in the country,” the S.E.C. official, associate director of enforcement Scott W. Friestad, said Thursday. “We will do everything possible to make sure that, in addition to any other remedies or sanctions imposed, none of these individuals ever works in the securities industry again.”
Mitchel Guttenberg, an executive director in UBS’s equity research department, was charged with two criminal counts of conspiracy to commit fraud and four criminal counts of securities fraud. Prosecutors said Mr. Guttenberg sold nonpublic information about pending upgrades and downgrades by UBS analysts for “hundreds of thousands of dollars,” allowing the recipients of the tips to make profitable trades before the changes were announced.
Randi Collotta, who was an attorney in Morgan Stanley’s global compliance division, was charged with one count of conspiracy and three counts of securities fraud, as was her husband, Christopher Collotta. Ms. Collotta allegedly leaked information about upcoming mergers and acquisitions, including the UnitedHealth Group’s $8.1 billion deal to buy PacifiCare Health Systems, announced in July 2005, allowing the tippees to trade in the company’s stocks before the transactions became public.
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