Latest Insider Trading Case Involving Investment Bankers

The latest insider trading case involving investment bankers filed back in March 2010. Igor Poteroba, Aleksey Koval, and Alexander Vorobiev have been charged with illegal insider trading. Igor Poteroba, who is an UBS director, misappropriated material nonpublic information about pending acquisitions and supplied it to Koval, who in turn fed the information to Vorobiev. This is a classic case of investment banker insider trading. The only twist is that they used code words such as “frequent flier miles” or “potatoes” as if rich investment bankers care about potatoes!

SEC alleges that illegal insider transactions began at least in 2005 and ended in February 2009. There were several different companies and defendants made close to $1 million. Usual stuff. There is something very interesting in this story though. Vorobiev and his wife moved back to Russia in 2009 and transferred more than half a million dollars of illicit insider trading profits in March 2009. What was SEC doing at the time? Did they know that something was going on? Did they cause Vorobievs to move back to Russia? Why was the last illegal insider trading in February 2009?

Did you also notice one other thing? Why did it take them nearly 5 years and several different insider trading instances to detect this illegal serial insider trading ring? How many data points do they need to make the connection? If they can’t detect illegal insider trading activity the first time, there could have been hundreds of them going on every year.