US federal prosecutors have charged a trio of investment bankers with insider trading, accusing them of participating in a “wide-ranging international scheme” that reaped tens of millions of dollars in profits.
The Manhattan US attorney’s office announced the charges on Tuesday, accusing a Goldman Sachs banker and former bankers at Moelis & Co and Centerview Partners of stealing information about clients to give to securities traders for cash.
“The insider trading charges announced today lay bare a long-running international scheme stretching over the course of years, whose participants earned tens of millions of dollars in illicit profits from illegally trading on stolen inside information,” said Audrey Strauss, a senior prosecutor with the Manhattan US attorney’s office.
The indictments, some of which have been unsealed since Friday, targeted three bankers, two securities traders and the son of a board director at a previously US-listed biotech company.
A former Moelis banker, Benjamin Taylor, 35, was charged alongside a former Centerview banker, Darina Windsor, 32, in an indictment unsealed on Monday. Both are still at large, prosecutors said.
Mr Taylor resides in France while Ms Windsor lives in Thailand, according to the announcement.
The two were accused of selling the information to unnamed middlemen who would then pass it on to traders. In return Mr Taylor and Ms Windsor, who were in a romantic relationship and referred to each other as “Pops” and “Popsy”, received more than $1m in cash, trips and luxury watches, prosecutors alleged.
According to the indictment, the insider trading ring ran between December 2012 and February 2018, targeting deals involving US pharmaceuticals company Merck and biopharmaceuticals groups Amgen and Onyx.
Mr Taylor had worked at Moelis until 2014. Prosecutors alleged he had continued to receive payments until 2018. Ms Windsor left Centerview in 2016.
On Friday last week a Goldman Sachs investment banker, Bryan Cohen, 33, was arrested on charges he also participated in the insider trading ring between 2015 and 2017. Mr Cohen was released on bail.
“We are studying the indictment,” said Ira Sorkin, an attorney for Mr Cohen.
While the charges did not name the companies, each of the banks confirmed they had co-operated with the investigation and criticised the alleged conduct.
Two securities traders, Joseph El-Khouri, 52, and Georgios Nikas, 54, were also charged. Mr El-Khouri was arrested in London on Monday, while Mr Nikas, who owns a Greek restaurant chain in New York, is at large, prosecutors said.
Telemaque Lavidas, the 38-year-old son of an Ariad Pharmaceuticals board member, was also arrested on Friday and charged with participating in the scheme, according to Tuesday’s announcement.
An attorney for Mr Lavidas declined to comment. Attorneys for the other defendants either did not immediately return requests for comment or could not be immediately identified.
The charges against the three investment bankers reference an unnamed securities trader based in Switzerland who received information from them. There is not enough information in the indictments to indicate if it is the same person.
In the case of Mr Taylor and Ms Windsor, the Switzerland-based securities trader occasionally leaked the deals information to unnamed journalists in an attempt to produce stories that would affect a company’s share price, the indictment said.
It details one instance in early 2013 where the trader gave information about Life Technologies to a journalist, whose subsequent story caused the company’s share price to spike. The trader generated more than $1m in profits as a result, the indictment said.
In another instance described by prosecutors, Ms Windsor allegedly sent Mr Taylor confidential information relating to Onyx, a client of her employer “Investment Bank B”, attached to an email titled “Once upon a time, there was a Pops searching for Truffles in the Forest”.
When Mr Taylor passed information from either himself or Ms Windsor to the two middlemen, he took steps to cover up the relationship, prosecutors alleged. The three used encrypted messaging apps and unregistered “burner” phones to communicate and arrange in-person meetings, prosecutors say.
The indictment alleged that Mr Taylor continued to receive payments for confidential information he had misappropriated through to at least the summer of 2018.
The case was filed secretly by prosecutors in March 2018 but not revealed until Monday.