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Sometimes Drunk People Actually Know What They’re Talking About: Insider Trading Edition

Much like being a first, second, or third year analyst on Wall Street, a lot of being a non-partner employee at a law firm is being shit on. Not respected. Treated like an idiot. That many of these attorneys have six-figure debt and are, in some cases, decades out of their early twenties makes the day to day treatment by their superiors all the more harsh. They can’t ease the pain with a visit to the Murray Hill Brother Jimmy’s; all the can do is go home and wonder “What kind of a life is this? Why do I put up with this,” cry, or some combination thereof. Some quit; others resign themselves to the way of life; a select few go out and get drunk on pinot grigio and decide, “I’m not some paper pusher. I’m an an esquire. I’m important. I know stuff. I’m gonna show them. I’m gonna show ALL of them [knocks over glass].”

An alleged insider trading scheme involving a claim about an intoxicated lawyer and his wealth manager has drawn the attention of US prosecutors…The SEC sued Tibor Klein, a New York investment adviser, in September for allegedly buying securities of King Pharmaceuticals after learning from one of his clients that the drug company was in talks to be acquired by Pfizer. Mr Klein’s client and friend, Robert Schulman, a patent attorney at Washington law firm Hunton & Williams, allegedly became intoxicated after drinking several glasses of wine over dinner and “blurted out to Klein, ‘It would be nice to be King for a day,’” according to the SEC complaint filed in a Florida court… In the lawsuit, the SEC alleges Mr Schulman “intended to imply he was a ‘big shot’ who knew ‘some kind of information’ about King Pharmaceuticals.” Hunton & Williams was representing King in its takeover talks although Mr Schulman was not personally involved, the SEC said.

The next trading day Mr Klein allegedly began buying King securities for his own account and for his clients, and subsequently called his friend, Michael Shechtman, who also bought King securities. Mr Shechtman, who made more than $100,000, agreed to settle the SEC’s civil charges in late December, without admitting or denying wrongdoing. Mr Klein, who allegedly made $8,824 from the trades, is fighting the allegations. Mr Schulman’s account made $15,500 from trades made by Mr Klein, the SEC alleges.

SEC Claims Drunk Lawyer Had Insider Tipple [FT via LaurenLaCapra]

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30 Responses to “Sometimes Drunk People Actually Know What They’re Talking About: Insider Trading Edition”

  1. Mary Jo says:

    Job well done, boys. Feels good taking down the big fish, dudn't it? Someone call Preet and tell him he can shove this one up his ass.

  2. psyc1_gunner says:

    "many of these attorneys have six-figure debt" the only place I hear this massive debt after law, business or med school chatter is the internet. people in real life have parents and grandparents that are worth a shit, especially at our nation's finest institutions.

    • Wealthy Grandparent says:

      This could be more a function of your lack of social interaction with real live human beings and heavy dependence on the internet for any type of social interaction than anything else.

      • Guest says:

        He's right you know. All the ballers at HBS stay at the Mandarin and wear their letter jackets to the bars. Even if they don't wear their jackets, soon as they drop that H bomb all the shapely Boston girls are ready to go home with them. It's not even fair. Random trips to Brazil or Vegas are the norm. Those dudes aren't calling Sallie May for book money, that's for sure.

    • Guest says:

      I thought your rant in OB was some clever, on the spot commenting. Seems I was mistaken and you might just have aspergers

    • Guest says:

      If this is serious, it's sad. If it's a joke, it's pathetic. I award you no points, and may God have mercy on your soul.

    • psyc1_gunner says:

      at least 30 people here don't even have trusts worth $150k. spring break in fort myers florida. lol.

  3. Billy Joel, CFA says:

    These kinds of things never end well.

  4. guest says:

    These guys may not be the brightest bulbs, but seriously, how on earth did they get caught at this?? What possible algorithm gets tripped by the purchase of a stock by someone who knows someone who isn't even working on the deal?

    • Guest says:

      Do you need a primer on pattern recognition or would you prefer a teach-in on "suspicious short-term trading in the days before a company is acquired"?

      • SlapChopSecurities says:

        Why choose between the two? Buy both now and we'll throw in our web based tutorial on "making outsize gains with way out of the money options trading" for free!

      • guest says:

        What you need is to spend a little less time watching law and order reruns. I'm no lawyer but I imagine it is pretty f'ing difficult to start with suspicious trading – by people not on the working group list for the deal – and finish with multiple convictions and a verbatim account of a leak that would otherwise be hearsay.

    • Dave! says:

      They take the trades from the days prior to the event, and cross reference them with people working at firms involved in the deal. The lawyer guy's account was involved (thanks to his friend), and they followed the breadcrumbs from there. (I assume)

      • SEC Quant says:

        No, no we most definitely don't do that, but it sounds like a great idea! Think we could discuss this after I get done reviewing this fresh batch of highly secret securities law related video files from Thailand?

  5. Chaz says:

    Tibor? What a douschy name

  6. biglawinsecure says:

    damn that first paragraph cuts way too deep, I better go abuse some first year associate with menial work.

  7. Confused says:

    Klein doesn't sound Indian…

  8. Guest says:

    Not sure I'd ever take financial advice from someone willing to risk ruining his career and face stiff fines/jail time for less than $9k.

  9. guest says:

    Ah hah! Banksters are manipulating Tibor now? When will they learn Main Street won't stand for it?!

    -Bloomberg Opinion comment section

  10. guest says:

    We're back! We'll show those Indians how its done!

    -The Tribe

  11. Raj Rajaratnam says:

    Shameful behaviour