Britain fines Deutsche Bank for market manipulation

Section:

Three Arrested in $6.7 Million Trading Probe

By Megan Davies and Christine Kearney
Reuters
Tuesday April 11, 2006

http://biz.yahoo.com/rb/060411/crime_insider.html?.v=4

NEW YORK -- A Goldman Sachs analyst, a Merrill Lynch banker, and a
printing plant worker were arrested on Tuesday for allegedly
participating in a $6.7 million insider trading ring that involved
stolen magazines, strippers, and a retired underwear factory worker
in Croatia.

The U.S. attorney said Eugene Plotkin, a bond analyst at Goldman
Sachs, was co-leader of an international insider trading ring that
traded off advance copies of BusinessWeek and tips from Stanislav
Shpigelman, a low-level investment banker at Merrill Lynch & Co. Inc.

Shpigelman and Plotkin were arrested on Tuesday, and their bail was
set at $3 million each.

A third man, Juan Renteria, an employee at a plant that printed
BusinessWeek magazine, was arrested in Milwaukee for allegedly
giving pre-publication copies of the weekly to Plotkin and a co-
conspirator.

"These defendants developed their sources of information in the
hopes of running that insider trading business as a money-making
machine, and for a little while it worked, netting millions of
dollars," said Michael Garcia, the U.S. attorney for the Southern
District of New York.

The arrests broadened an insider trading case that began in August
2005, when regulators grew suspicious of a 63-year-old Croatian
retiree's options trading profits.

The account belonging to the retiree, Sonja Anticevic, was frozen in
August, and her 29-year-old nephew, David Pajcin, was charged with
insider trading.

Pajcin is alleged to be the co-head of the trading ring with
Plotkin, and is cooperating with authorities.

The U.S. Securities and Exchanges Commission said Plotkin and Pajcin
persuaded Shpigelman to provide tips on upcoming mergers in return
for a share of the trading profits.

In a second scheme, Plotkin and Pajcin placed ads in newspapers and
online seeking workers to land jobs at a printing plant, steal
advance copies of BusinessWeek, and tip them about the names of
companies discussed. Renteria was one of the workers.

The beneficiaries of Pajcin's and Plotkin's tips were far-flung,
including people in Croatia, Germany, and California.

Plotkin and Pajcin contemplated hiring strippers to gain information
from bankers while dancing for them, but this plan was never
executed, authorities said.

Plotkin, 26, faces a maximum penalty of 70 years in prison;
Shpigelman, 23, could get up to 55 years; and Renteria, 20, could be
jailed for 15 years.

Separately, the SEC filed civil insider trading charges against
Shpigelman, Plotkin, Renteria and a number of people who allegedly
received inside tips, including a New York exotic dancer.

Plotkin and Pajcin met at Goldman Sachs, and had planned to recruit
other bankers for their trading ring, authorities said.

Plotkin and Pajcin's ring made at least $6.4 million from trading on
news of upcoming mergers, including Procter & Gamble Co.'s
acquisition of Gillette Co. in January 2005 and Adidas' acquisition
of Reebok in August.

In the other scheme, Plotkin and Pajcin allegedly bribed two
employees of Quad/Graphics, a BusinessWeek printer, to pass along
the names of stocks favorably mentioned in the magazine's "Inside
Wall Street" column, on the trading day before it hit the newsstands.

Plotkin and Pajcin traded in about 20 different stocks on this
basis, earning $340,000 in illicit gains, the complaint said. These
stocks included TheStreet.com Inc., PriceSmart Inc., and Symbol
Technologies Inc.

BusinessWeek has been involved in insider trading cases before. A
spokeswoman for McGraw-Hill Cos., which publishes BusinessWeek, said
the magazine has taken significant steps to ensure the integrity and
privacy of its stories.

Renteria has been suspended without pay pending further
investigation, a spokeswoman for Quad/Graphics said. The other
employee, Nickolaus Shuster, was a temporary staffer.

A spokesman at Merrill said the firm is cooperating with regulators
and does not tolerate insider trading. Shpigelman was placed on
administrative leave today, he added.

A spokesman for Goldman Sachs said the company has fully cooperated
with authorities.

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