(Bloomberg) -- Two London investment bankers were charged in the U.S. with selling information about pending deals as part of a “large-scale, international insider-trading ring” that, prosecutors claim, generated tens of millions of dollars in illicit profits.
The charges were unsealed Monday in New York against Benjamin Taylor and Darina Windsor, who both worked for global investment banks with offices in London and Manhattan. The U.S. didn’t identify the banks in the indictment but Moelis & Co. confirmed Taylor had worked at the firm.
Windsor worked at Centerview Partners LLC in London, according to the U.K. Financial Conduct Authority’s register. That draws two relatively new advisory banks -- Moelis founded in 2007, Centerview in 2006 -- into a widening insider-trading scandal.
According to the indictment, Taylor and Windsor were involved in a romantic relationship and shared a London apartment. They called each other “Pops” and “Popsy” in emails, prosecutors said.
Federal prosecutors in Manhattan have been probing a group of stock pickers in Europe and the Middle East who have made tens of millions of dollars trading ahead of takeover reports or merger announcements. Some of the information Taylor and Windsor allegedly stole was leaked to the media by a securities trader who profited when it was published.
Despite an earlier crackdown on insider trading that won convictions of dozens of bankers, traders and corporate executives, the new charges indicate that the practice continues unabated on Wall Street. Last week Goldman Sachs Group Inc. investment banker Bryan Cohen was arrested in New York for allegedly passing confidential information to a securities trader in Switzerland.
Read more on Goldman Sachs case here
Over more than five years, from late 2012 to early 2018, Taylor and Windsor allegedly sold information they gleaned at work on 22 companies to two middlemen who aren’t identified in the Sept. 9 indictment. Taylor and Windsor got more than $1 million in benefits, including cash, luxury watches and expensive clothes, according to the government.
The middlemen then passed the tips to securities traders who would profit before the information became public, according to prosecutors.
Taylor left his bank around 2015 and Windsor was fired around 2016, according to the indictment. But Taylor continued getting inside information from people at at least one investment bank, prosecutors said.
Nicholas Biase, a spokesman for Manhattan U.S. Attorney Geoffrey Berman, had no immediate comment on whether Taylor and Windsor are under arrest. Information about Taylor’s and Windsor’s lawyers wasn’t immediately available.
“We are appalled that a former junior employee violated the core values that are most important to our firm,” a Moelis spokesperson said. “We have cooperated fully with law enforcement authorities since being made aware of the allegations.”
‘Once Upon a Time’
Windsor was fired for misconduct from Centerview’s London office, where she was a junior employee nearly four years ago, a spokeswoman for the firm said. “We are cooperating with the authorities on this matter,” she said. “Maintaining our clients’ confidentiality is paramount and something we are focused on every day.”
The FCA register shows Taylor worked at Credit Suisse for less than a year during the indictment period, but there was no suggestion in the filing that he leaked any price-sensitive information while working there. A spokesman for Credit Suisse declined to comment.
Windsor and Taylor exchanged information in cryptic messages. For example, in October 2012 Windsor sent an email to Taylor titled “Once upon a time, there was a Pops searching for Truffles in the Forest...,“ according to the indictment. Attached to the email was confidential information relating to Onyx Pharmaceuticals Inc., which was acquired by Amgen Inc. in 2013 for $8.5 billion.
Taylor and his two middlemen used encrypted messaging apps and unregistered “burner” phones to communicate and arrange meetings, the U.S. said. Taylor provided the confidential information and documents to the middlemen in person, and they in turn often met face-to-face with securities traders as well to pass on the information.
$1 Million Profit
A Switzerland-based securities trader would occasionally leak the information about potential acquisitions to a journalist and made more than $1 million in profit one time when news got published that a company was a takeover target, according to the indictment. It wasn’t clear from the court filing whether the securities trader in Switzerland was the same one referred to in the charges against the Goldman Sachs banker last week.
Windsor created a spreadsheet in 2013 to forecast how the proceeds would be split between her, Taylor and the securities trader in Switzerland, prosecutors said.
Of the 22 companies listed in the indictment, two were clients of Moelis and 13 were clients of the bank where Windsor worked.
The companies included Metals USA Holdings Corp., AmerisourceBergen Corp., Amgen Inc., Merck & Co., InterMune Inc., Hyperion Therapeutics Inc., Celgene Corp., Solera Holdings Inc. and Johnson Controls International Plc.
Cohen, 33, was arrested Friday for allegedly sharing information with a trader who passed it on to George Nikas, a 54-year-old New York restaurateur who owns the GRK Fresh chain.
Nikas is accused of trading in many of the same companies whose inside information Taylor and Windsor are charged with selling. Fifteen of the companies overlap, although Nikas is charged with trading in others as well.
The case is U.S. v. Taylor, 18-cr-00184, U.S. District Court, Southern District of New York (Manhattan).
(Updates with details of Windsor being fired for misconduct in twelfth paragraph.)
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