SEC charges UBS banker with insider trading

by Jack Kelly on March 25, 2010

Above: Robert Khuzami

Justin Baer, Financial Times, March 22, 2010

A UBS investment banker and a college friend were
accused by US authorities of profiting from insider trading involving mergers
and acquisitions.

The US Attorney’s office in Manhattan filed criminal charges
against Igor Poteroba, a healthcare banker in the Swiss bank’s New York
office, and his friend, Aleksey Koval. The two were arrested on Wednesday by
the FBI.

The Securities and Exchange Commission on Wednesday also
filed civil charges alleging that Mr Poteroba tipped off Mr Koval with
“highly confidential inside information” about 11 transactions involving
pharmaceutical companies. The SEC said that they and a third man made about $1m
in profits from their activities.

According to the SEC’s complaint, Mr Poteroba used an
elaborate system of coded e-mail messages – securities and money were referred
to as “frequent flyer miles” and “potatoes” – to pass along deal information to
Mr Koval.

“They thought it was clever to use code words,” Robert
Khuzami, director of the SEC’s enforcement division, said in a statement.
“These words were code for nothing more than ‘we are breaking the law’.

Continue to full article.

Synopsis: SEC and US Attorney’s Office in Manhattan filed
charges this week against a UBS investment banker and a his friend. 

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