In the early 1990’s, a Canadian man would call to wake his friend at 4 a.m. so the friend, a Sullivan & Cromwell associate, could go search the firm’s offices for clues about upcoming deals.
He called the early-morning scavenger hunts “spelunking” trips and would look for information about pending merger and acquisition transactions on desks and copy machines.
The then-associate, Gil Cornblum, who eventually became a partner at Dorsey & Whitney, killed himself earlier this week, the night before a settlement was expected in a criminal insider trading investigation.
Cornblum’s friend, Stanko Grmovsek, plead guilty in two insider-trading cases, one in Ontario and one in a New York federal court. The federal complaint, filed on Tuesday by the SEC, says that Grmovsek made more than $10 million dollars trading on inside information provided by Cornblum.
Grmovsek “traded in advance of as many as 40 announced mergers and acquisition…transactions using information Cornblum learned through his work as an attorney at major law firms,” the complaint says.
Fifteen of these transactions were learned about between 1996 and 1998 when Cornblum worked at S&C and more than 20 came between 2004 and 2008 during Cornblum’s time at Dorsey, according to the complaint. Cornblum was staffed on the relevant deals and would tip Grmovsek off with material, non-public information.
Grmovsek told Bloomberg that Cornblum attempted to kill himself twice after he was charged with insider trading. Dorsey & Whitney fired Cornblum after it was revealed he was under investigation for insider trading.
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