Wall Street: 20th Century Fox
We’ve seen this tale too many times. BigLaw attorney gets tip, trades on it, gets busted. Or he tells his friends, his father, his dentist, whatever.
This time around, we have Eric Holzer (Brooklyn Law, indeterminate year, but he was admitted in 2003 and is currently delinquent), a 34-year old, currently suspended tax associate from Paul Hastings. Holzer was friends with, and apparently did taxes for, Matthew and Nina Devlin. Nina is a PR executive at Brunswick Group, which advised on a number of high-profile mergers. Matt was a broker at Barclay’s Wealth Unit. Matt was a classy guy – depending on how you look at it, that’s sarcastic or not. He was stealing information about the upcoming deals from his wife (good spin: he wanted to protect her; bad spin: he was stealing from his wife).
Oh, and Matt is also now known as “CW-1″ in the various criminal complaints. CW-1 is short for “Cooperating Witness 1.”
In addition to trading for his personal account on three deals Nina’s firm was working on, Holzer also set up an account with a relative so Matt could trade on the inside information and made some cash payments directly to Matt.
What makes matters worse is that Holzer really should have known better. He has worked on a few small M&A deals over the years. (Unfortunately, Paul Hastings has taken his press releases offline, but you can access the actual releases with Google Cache.) As recently as Monday, Holzer was included on the press release for a small biodiesel JV for client GreenShift.
More after the jump about the futility of insider trading and the information Holzer knew, but ignored, and what you should know if you’re disposed to this sort of activity.Just two years ago, we had the fantastic story of Zvi Rosenthal and his family, who started a hedge fund to do their insider trading. Among others caught up in that ring were Zvi’s sons Amir, then a structured-finance (remember that?) associate at Thacher Proffitt (remember them?), and Oren, a white-collar litigator at O’Melveny & Myers.
Here’s a little tip that M&A and securities lawyers (and some white-collar defense types as well, I suppose) are well aware of. Whenever there is “suspicious activity” in a security, the SEC pulls together lists of all of the trades, including the traders’ names and hometowns. The list gets sent to the law firms, investment banks, and accountants working on the deal. The members of the deal teams are expected to go through and certify that they don’t know anyone on the list.
What makes this case really galling is that Holzer even know about the list! As law.com points out:
in a taped conversation on Sept. 4, in which Mr. Devlin wore a wire, Mr. Devlin brings up the watch list and said to Holzer, “Remember, and that’s why we stopped?”
“Yeah?” Holzer replied.
Then Mr. Devlin said he wanted to make sure “you have a backstory if anybody ever comes to you and says why you bought X, Y, Z.”
After a brief exchange, Holzer said, “Oh yeah, I’ve got a backstory. Oh yeah, I’m not worried about it, my heart almost dropped.”
Holzer then said, “That was probably over two years ago, right? That was a long time ago.”
We can’t wait to hear what that backstory is.
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{ 2 comments… read them below or add one }
But don’t you agree – guys like this DESERVE to be taken down. Even someone with the barest attendance record at law school knows that this kind of stuff is wrong, loaded with booby traps and a black hole for a promising legal career. The law of natural selection is in play amongst aspiring corporate lawyers – the SEC just picked off one of the stupid ones, helping to weed out the legal herd.
But don’t you agree – guys like this DESERVE to be taken down. Even someone with the barest attendance record at law school knows that this kind of stuff is wrong, loaded with booby traps and a black hole for a promising legal career. The law of natural selection is in play amongst aspiring corporate lawyers – the SEC just picked off one of the stupid ones, helping to weed out the legal herd.