By Nate Raymond and David Thomas
BOSTON, May 6 (Reuters) – Federal prosecutors on Wednesday announced that 30 people, including corporate lawyers and financial professionals have been indicted in connection with an insider trading scheme that relied on information about mergers stolen from major law firms.
Nineteen people were arrested, including Nicolo Nourafchan, a corporate attorney who had worked at several large law firms and who was at the center of a vast, decade-long scheme that netted him and his co-defendants tens of millions of dollars in illicit profits, federal prosecutors in Boston said.
The Yale Law School-educated attorney had worked from 2013 to 2023 at Sidley Austin, Latham & Watkins and Goodwin Procter, according to an indictment, which did not name the victim firms but detailed publicly announced corporate deals they worked on.
The Los Angeles resident and the other defendants face a host of charges, including securities fraud, and were expected to make their appearances in federal courts in California, Florida and New York.
Two defendants named in the two indictments unsealed on Wednesday are in Russia and Israel and are considered fugitives, prosecutors said. Another nine had previously pleaded guilty in related cases that were only unsealed on Wednesday.
Lawyers for Nourafchan and the others could not be immediately identified. The law firms did not immediately respond to requests for comment.
Prosecutors said Nourafchan and others accessed law firms’ internal computer networks to view confidential documents concerning pending mergers and then provided tips about those yet-to-be-announced deals to others in exchange for kickbacks.
Nourafchan and his partner in the scheme, New York lawyer Robert Yadgarov, recruited lawyers and others to serve as sources of inside information in exchange for payments of hundreds of thousands of dollars in cash.
Nourafchan and Yadgarov also provided inside information to a network of traders and middlemen, prosecutors said. The traders in turn placed trades on the tips on either the two lawyers’ behalf or on their own behalf, and many then passed the information on to additional traders, authorities said.
In total, the traders implicated in the scheme engaged in insider trading ahead of nearly 30 M&A deals involving public companies, such as Amazon.com Inc’s proposal in 2022 to acquire iRobot, a deal the companies later abandoned in the face of antitrust regulator opposition.
At the time, Nourafchan was employed by Goodwin Procter, which advised iRobot. According to the indictment, he viewed confidential materials about the deal on the law firm’s document management system while “on leave” from the firm.
(Reporting by Nate Raymond in Boston; Editing by Aurora Ellis)
