(Bloomberg) -- A former Morgan Stanley broker pleaded guilty to trading on insider corporate tips he got from a middleman who showed him secret notes before chewing and swallowing them at New York’s Grand Central Terminal.
Vladimir Eydelman, 43, admitted Wednesday in federal court in Trenton, New Jersey, that he traded on information stolen from computers at Simpson Thacher & Bartlett, a New York law firm. The five-year scheme made $5.6 million in profit, according to a statement by U.S. Attorney Paul Fishman. Eydelman was charged in March 2014 and fired by his firm.
Frank Tamayo, 42, pleaded guilty in September 2014 to his role as the middleman. Eydelman admitted he would meet Tamayo near the large clock inside the main concourse at Grand Central station to receive the stolen data. He said Tamayo wrote the relevant ticker symbols on pieces of paper or napkins and showed them to Eydelman before eating them.
Eydelman admitted he used the tips to buy securities on behalf of himself, family members, friends, Tamayo and brokerage clients before the public announcement of deals, according to the statement. Eydelman pleaded guilty to securities fraud, tender-offer fraud and conspiracy to commit both crimes.
Tamayo, a mortgage broker from Brooklyn, New York, pleaded guilty to the same charges.
The scheme lasted from 2009 to 2013, Eydelman said. He worked at Oppenheimer & Co. Inc. from March 2001 to September 2012, when he joined Morgan Stanley and continued the trades, the U.S. said. He stopped working at Morgan Stanley in March 2014, according to the government.
Prosecutors have also charged Steven Metro, 41, a former managing clerk at Simpson Thacher, where he worked from 1999 until March 2014. Metro has pleaded not guilty and is scheduled for trial on Feb 8.
Nasdaq and New York Stock Exchange trades were executed through computer servers in New Jersey. Eydelman also did some trades from home when he lived in Colt’s Neck, New Jersey, prosecutors said.
Prosecutors didn’t identify Tamayo as the middleman when they announced the charges against the three men. They said the middleman cooperated with the FBI and secretly recorded conversations.