A Goldman Sachs analyst, a Merrill Lynch banker and a printing plant worker were arrested last night for allegedly participating in a $6.7 million insider trading ring that involved stolen magazines, strippers and a retired underwear factory worker in Croatia.
The US Attorney said Eugene Plotkin, a bond analyst at Goldman Sachs, was co-leader of an international insider trading ring that traded off advance copies of BusinessWeek and tips from Stanislav Shpigelman, a low-level investment banker at Merrill Lynch.
Mr Shpigelman and Mr Plotkin were arrested and their bail was set at $3 million each.
A third man, Juan Renteria, an employee at a plant that printed BusinessWeek magazine, was arrested in Milwaukee for allegedly giving pre-publication copies of the weekly to Mr Plotkin and a co-conspirator.
"These defendants developed their sources of information in the hopes of running that insider trading business as a money-making machine, and for a little while it worked, netting millions of dollars," said Michael Garcia, the US Attorney for the Southern District of New York.
The arrests broadened an insider trading case that began in August 2005, when regulators grew suspicious of a 63-year-old Croatian retiree's options trading profits.
The account belonging to the retiree, Sonja Anticevic, was frozen in August, and her 29-year-old nephew, David Pajcin, was charged with insider trading.
Mr Pajcin is alleged to be the co-head of the trading ring with Mr Plotkin, and is cooperating with authorities.
The US Securities and Exchanges Commission said Mr Plotkin and Mr Pajcin persuaded Mr Shpigelman to provide tips on upcoming mergers in return for a share of the trading profits.
In a second scheme, Mr Plotkin and Mr Pajcin placed ads in newspapers and online seeking workers to land jobs at a printing plant, steal advance copies of BusinessWeek and tip them about the names of companies discussed. Renteria was one of the workers.
Separately, the SEC filed civil insider trading charges against Mr Shpigelman, Mr Plotkin, Mr Renteria and a number of people who allegedly received inside tips, including a New York exotic dancer.
Mr Plotkin and Mr Pajcin met at Goldman Sachs, and had planned to recruit other bankers for their trading ring, authorities said. Their ring made at least $6.4 million from trading on news of upcoming mergers, including Procter & Gamble's acquisition of Gillette in January 2005 and Adidas' acquisition of Reebok in August.