Legal News

It Couldn?t Be Worse for Igor (The UBS Investment Banker)

By Amir Efrati

If you think you’ve heard the words “UBS” and “insider trading” in the same sentence a lot lately, you’d be right. (Examples 1, 2 and 3.)

Thursday night saw the opening of the latest chapter, as a high-ranking investment banker in UBS’s health-care mergers group was arrested along with a friend for allegedly making trades ahead of deals over the past five years. Here’s the WSJ story and one from the FT.

The feds are making it pretty tough. They showed last year that you can’t plan insider trades with disposable cell phones, or even through meetups in person because, heck, your “pal” might be an informant.

Now prosecutors are sending Wall Street another message: be very careful when discussing frequent flier miles, wedding registries, and patio dimensions if they are code words for upcoming insider trades. That was allegedly what the UBS Banker, Igor* Poteroba, and his college buddy, Alexei Koval, did before making some $1 million in illicit profits.

The Securities and Exchange Commission also sued the men, along with a third alleged accomplice who wasn’t criminally charged. Prosecutors said the uncharged co-conspirator was residing in Russia, where all the men are from. In addition, prosecutors referenced a fourth alleged co-conspirator but didn’t name him or her.

“We are not finished,” said Preet Bharara, the Manhattan U.S. attorney, in a statement.

*In case you’re wondering, in the photo is Marty Feldman as “Igor” from the classic comedy Young Frankenstein. Igor’s famous line as he and Gene Wilder dig up a grave: “Could be worse . . . could be raining.” YouTube clip here.

Full post as published by Law Blog - WSJ.com on March 25, 2010 (boomark / email).