- DoJ charged 5 persons, SEC 7, for insider trading before mergers, acquisitions.
- Group generated millions in profit by trading on confidential M&A information.
- Evasion by shell companies, codes, and encrypted, self-destructing messaging.
- US Attorney, NY also unsealed criminal charges against same seven individuals.
Bank IT Employee Source
- Daniel Rivas, a former IT employee of large bank was at the center of scheme.
- Consultant in research, capital markets technology group, of investment bank.
- Access to an internal, proprietary deal tracking system, that bank maintained.
- Misused access to bank computer system to tip four individuals who traded on.
- Rivas allegedly also tipped others, who also traded on it and passed along tips.
- Profited on market-moving news on 30 impending corporate deals, in 2014-17.
Wide Range of Tippees
- Tipped girlfriend's father James Moodhe, who used code and meetings to relay.
- Moodhe was treasurer and assistant controller for global inter-dealer brokerage.
- Moodhe passed tips to a friend Michael Siva, a financial advisor at broker firm.
- Siva used information to do profitable trades, for clients of his brokerage firm.
- Earned commissions, and passed many tips along to client who traded on them.
- Siva also traded on behalf of himself and his wife based on 2 tips from Moodhe.
- Other trade ring of two Rivas's friends, Roberto Rodriguez, and Rodolfo Sablon.
- Discussed tips on encrypted, self-destructing message app, via shell companies.
- In year they turned under $100k into $2mn profits by aggressive option trading.
- Third trading ring involved Jhonatan Zoquier who also passed to Jeffrey Rogiers.
SEC Analysis Unit
- Trading identified by the SEC market abuse unit, analysis and detection center.
- Use data analysis to find suspicious pattern, e.g. improbably successful trading.
- Enhanced detection abilities allowed staff to spot the unusual trading activities.
- DoJ announced unsealing of guilty pleas on Aug. 9, 2017, by Rivas and Moodhe.
- Admitted their involvement in scheme, and were cooperating with government.