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Ex-Simpson Thacher Clerk Pleads Guilty in Note-Chewing Insider Trading Case

Nov. 12, 2015, 9:09 PM

By David Voreacos, Bloomberg News

A former law firm clerk pleaded guilty to stealing corporate secrets and passing them to a friend, who chewed and swallowed the written notes after showing them to a broker at New York’s Grand Central Terminal.

Steven Metro, 41, once a managing clerk at Simpson Thacher & Bartlett LLP in New York, admitted Thursday to taking part in a five-year insider-trading scheme that prosecutors said made $5.6 million in profit.

From 2009 to 2013, Metro stole data on tender offers and mergers and acquisitions and gave it to a friend, Frank Tamayo, 42, prosecutors said. Tamayo pleaded guilty in September, admitting he took Metro’s tips and gave them to broker Vladimir Eydelman, 43, by the large clock in the main concourse at the Manhattan train station.

Tamayo wrote the relevant ticker symbols on a piece of paper or napkin and showed Eydelman. Tamayo then folded up the note, “placed it into his mouth and chewed the paper or napkin to destroy it,” he admitted in pleading guilty. Eydelman has also pleaded guilty.

Metro scoured the law firm’s computer system for corporate tips to pass to Tamayo, a law school friend, prosecutors said.

Eydelman used the tips to trade ahead of at least 13 planned corporate transactions and shared the profit with the other two men, prosecutors said. Metro made $168,000 in profit, according to a statement by New Jersey U.S. Attorney Paul Fishman.

Metro, of Katonah, New York, pleaded guilty to securities fraud and conspiracy to commit securities and tender-offer fraud. He faces as long as 20 years in prison when he is sentenced on Feb. 17 in federal court in Trenton, New Jersey.

Simpson Thacher said Metro was fired.

The case is U.S. v. Metro, 15-cr-00028, U.S. District Court, District of New Jersey (Trenton).