Goldman Sachs and Merrill Lynch employees charged
By Scott Files
Published on April 11, 2006
The scheme involved stealing pre-publication copies of Business Week magazine to gain knowledge of share tips and details about upcoming mergers. The third man, Juan Renteria, was an employee at the plant where the Business Week Magazines were printed. All three of the men face charges of insider trading and securites fraud.
Prosecutor Garcia stated that "there are still employees at some of the biggest and best Wall Street firms that are motivated by greed and are willing to put their careers and futures in jeopardy."
The case has its roots in the arrest of a former Goldman employee, David Pajcin, who allegedly made stock trades using information from stolen pre-publication copies of Business Week. Mr. Pajcin is currently cooperating with authorities in the case.
The U.S. Securities and Exchanges Commission charge that Plotkin and Pajcin persuaded Shpigelman to provide tips on upcoming mergers in return for a share of trading profits. Additionally, Plotkin and Pajcin allegedly recruited other individuals to obtain jobs at a printing plant with the intent to steal advance copies of the business periodical.
If convicted, Plotkin, aged 26, faces a maximum penalty of 70 years in prison; Shpigelman, aged 23, could get up to 55 years; and Renteria, aged 20, could be jailed for 15 years.
Plotkin and Pajcin traded stocks based on those tips, making at least $6.4 million in illicit gains, according to the complaint.
The deals included Proctor & Gamble Co.'s acquisition of Gillette Co. in January 2005 and Adidas' acquisition of Reebok in August. The Adidas deal allegedly netted them more than $2 million in profit.
A spokesman at Merrill Lynch said: "These allegations, if true, represent a serious breach of trust and violation of Merrill Lynch's fundamental principles. We do not tolerate or condone insider trading. This conduct victimizes the company and the clients alike. It is outrageous, if true. We are cooperating with the regulators."
Goldman Sachs released a statement saying that they are completely cooperating with prosecutors.
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