21 September,2014 08:06 AM IST | | Agencies
Frank Tamayo scribbled secret stock tips on napkins, passed them on to an accomplice and then chewed the paper
Brooklyn: According to federal prosecutors, Frank Tamayo, 41, a Brooklyn mortgage broker, would scribble secret stock tips on napkins and pass them to an accomplice in Grand Central station before eating them. Tamayo pleaded guilty to insider trading on Friday.
Tamayo would write the ticker symbols of the stocks to be bought on napkins. Representational picture
Based on tips about a dozen transactions being negotiated by a prestigious New York law firm, Tamayo was the middleman in what prosecutors called a three-man scheme that generated $5.6 million in illegal profits over five years.
US Attorney Paul Fishman said that Tamayo, who had been cooperating with authorities, pleaded guilty to securities fraud, tender offer fraud, and conspiracy charges in the federal court in Trenton, New Jersey.
The defendant, who faces up to 20 years in prison, also agreed to forfeit more than $1 million, the contents of two brokerage accounts, and a 2008 Audi Q7.
Authorities in March had accused Steven Metro, a managing clerk at Simpson Thacher & Bartlett, of passing tips about the law firm's clients through Tamayo to Morgan Stanley stockbroker Vladimir Eydelman, who traded for himself, his family, customers and Tamayo. Prosecutors affirm that the scheme lacked sophisticated computerised techniques or cover-ups, now often associated with insider trading.
They said Tamayo would meet Metro, a friend and former law school classmate, at Manhattan bars or coffee shops, and write the ticker symbols of stocks to be bought on napkins or Post-It notes. Tamayo would then meet Eydelman in Grand Central, show him a symbol and, once knew he that Eydelman had memorised it, "chew the paper or napkin to destroy it," prosecutors said.
