An alleged insider trading scheme involved a guy taking notes on Post-Its and later eating them

The guy who served as a middleman in an insider trading scheme that involved passing illicit stock tips on Post-it notes and napkins and then swallowing them doesn’t have to pay a fine, the SEC said in a release.

Last year, the SEC charged a stockbroker and a clerk from a top corporate law firm. Vladimir Eydelman, 43, who worked at Oppenheimer and later Morgan Stanley, and Steven Metro, 43, a managing clerk at Simpson Thacher & Bartlett, were both accused of engaging in a four-year scheme that netted $US5.6 million in ill-gotten gains, according to the SEC’s complaint.

According to the SEC, Eydelman and Metro carried out the scheme by using a mutual friend, later identified as Frank Tamayo of Brooklyn, as a “middleman” to exchange the material information, the SEC said.

Tamayo, who has pleaded guilty, served as a cooperating witness in the case. Because of that, he doesn’t have to pay a monetary penalty. He does, however, have to disgorge about $US1 million in ill-gotten gains.

“For his extensive cooperation in the SEC’s investigation, Tamayo will not face a monetary penalty from the SEC. In the proposed final judgment, which is subject to court approval, Tamayo would be ordered to disgorge more than $US1 million of his ill-gotten gains from the scheme, but that payment would be deemed satisfied by the entry of orders of forfeiture or restitution in the parallel criminal case, in which he has pleaded guilty,” the SEC said.

In its initial complaint, the SEC alleged that Metro would find out non-public information from deals his law firm was working on by accessing the firm’s confidential computer records.

Metro would then arrange to meet Tamayo at a New York City coffee shop or bar. During these meetings, Metro would type stock ticker symbols on his cell-phone screen and point to indicate which company was being acquired in the transaction, the SEC release alleged. He would also indicate the announcement date and the acquisition price, the regulator also alleges.

The SEC alleged that Tamayo would then arrange to meet up with Eydelman, the stockbroker, in Grand Central Terminal near the clock. While in the train station, Tamayo would show Eydelman what was written on the Post-it or napkin, then chew it up and swallow it.

The complaint says that they did this for more than a dozen companies.

Metro and Eydelman were arrested last year.

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