The U.S. Securities and Exchange Commission has charged 14 defendants in a blatant insider trading scheme that gathered more than $15 million in illegal insider trading profits on thousands of trades. According to the reports the scheme was executed using information stolen from UBS Securities LLC and Morgan Stanley & Co., Inc. However, the U.S. government’s accusations that Morgan Stanley, UBS AG and Bear Stearns Cos. employees were instrumental in the insider-trading ring outlines why regulators and lawmakers are apprehensive of Wall Street’s relationship with hedge funds.
The modus operandi of the conspiracy involved unlawful trading ahead of upgrades and downgrades by UBS research analysts and corporate acquisition announcements involving Morgan Stanley’s investment banking clients. The main players of the UBS part of the scheme traveled extra lengths to hide their illegal conduct.
The list of elites involved in the racket also includes, Mitchel Guttenberg, an executive director and institutional client manager at UBS. The executive is accused of accepting hundreds of thousands of dollars as he sold non-public information to two men pertaining to forthcoming upgrades and downgrades in UBS analysts’ securities recommendations.
UBS in its official statement has said that it is assisting the authorities to the fullest extent possible in their investigation into the alleged actions of a single UBS employee. On the other hand, Morgan Stanley has stated that they have cooperated and are continuing to cooperate fully with authorities regarding a former employee who allegedly stole information from the firm.
