Legal News

Dorsey Lawyer Caught in Insider-Trading Probe Gets Pink Slip

By Ashby Jones

Whenever a lawyer gets into hot water over insider-trading charges, we’re always inclined to think “why doesn’t this happen more often?” Not that we have such a dark view of lawyers and the profession (quite to the contrary), but given everything — the access, the money, the ease of pulling off a few trades and making a quick buck off of some insider information — we’d just think it’d come across our radar screen more frequently. (That said, click here and here and here for some relatively recent examples.)

We asked the question to ourselves again this morning in reading the latest, that Minneapolis-based Dorsey & Whitney fired a partner in Toronto in connection with government probes of alleged insider trading. Here are stories from the NLJ and Bloomberg.

The allegations involve former Dorsey lawyer Gil Cornblum and one of Cornblum’s Osgood Hall Law School classmates, Toronto business consultant Stan Grmovsek.

According to the Bloomberg story, Cornblum advised on Yamana Gold Inc.’s February 2006 acquisition of Desert Sun Mining Inc. as well as Goldcorp Inc.’s August 2006, acquisition of Glamis Gold Ltd. Grmovsek, using accounts in his, his sister’s and his brother-in-law’s names, bought 53,100 shares of Desert Sun from Feb. 7, 2006, to Feb. 20, 2006, according to an affidavit by Ontario Securities Commission investigator Stephen Carpenter, realizing a profit of $52,800 (Canadian) when the shares were sold Feb. 22, 2006.

Carpenter’s affidavit reportedly doesn’t name Cornblum, referring to him instead only as “the lawyer.” “I am very heart-broken about what my friend did as he has always been someone that I greatly cared for and admired and respected,” Grmovsek said in an e-mail to Bloomberg.

Cornblum reportedly didn’t respond to Bloomberg’s e-mail and phone messages seeking comment.

In a statement issued Thursday afternoon, the firm said it is cooperating fully with inquires made by investigators.

LB Readers, can you help us out with this one? Are trades based on inside information gleaned from lawyers really rare or is it that they happen fairly frequently but are hard for investigators to track down?

Full post as published by Law Blog - WSJ.com on May 09, 2008 (boomark / email).