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Are you at the center of the Venn diagram that is hopeless romantics and securities law purists? (Come on, I know it’s more than just me.) Then this story is sure to infuriate on MULTIPLE LEVELS.

Seth Markin, a former FBI trainee, and his friend Brandon Wong were arrested on insider trading charges (there’s also a parallel civil complaint filed by the Securities and Exchange Commission) earlier this week. According to the indictment, the pair made ~$1.4 million by improperly trading on nonpublic information, specifically that Pandion was set to be acquired by pharmaceutical company Merck.

How’d they come across this insider information? The indictment indicated Markin was dating a Biglaw associate staffed on the M&A deal, and he “abused his relationship of trust and confidence” to gain access to the information.

As reported by Law360:

The law firm associate girlfriend was working from home as she worked on the Merck deal, trusting that Markin would “maintain her confidences and keep information she shared with him confidential,” according to the indictment.

“Markin told the law firm associate that he had a security clearance, was going to be an FBI agent, was always truthful with her, and wanted to marry her,” the DOJ said.

The associate took confidential work calls from her apartment, sometimes on speakerphone, and kept work documents such as binders, notes, and legal pads “out in the open in her apartment,” where Markin sometimes stayed for days at a time, the DOJ said.

“Because she trusted Seth Markin … she left him alone in her apartment and gave him a key fob to access her building,” the indictment states. “[She] trusted that Markin would not look through her confidential work materials, and if he overheard or saw anything confidential, he would keep it secret.”

But, alas, the government alleges those confidences were not kept.

Neither the associate nor the firm (though unidentified in the indictment, it does indicate the associate worked on behalf of Merck and Merck was represented by Covington & Burling on the deal) have been accused of any wrongdoing. But you *have* to imagine it’s a source of discomfort/embarrassment for everyone involved. It’s a pretty decent reminder that attorneys have to be aggressive about confidentiality — even when loved ones think we’re being overly cautious.

Markin attempted to conceal his trading from both his now ex-girlfriend and the FBI:

Markin also lied to hide the insider trading, authorities said. After Markin and the law firm associate ended their relationship and as Markin was preparing to begin training as a new FBI agent, the attorney called Markin to ask why his name had come up in an inquiry by the Financial Industry Regulatory Authority into Pandion stock.

“In response, Markin lied … and falsely claimed that he did not trade in Pandion stock,” the DOJ said. “Markin subsequently took steps to further conceal his criminal activity, including by lying to the FBI when he was interviewed about the trading at issue in this case.”

But in other ways, Markin and Wong were not subtle about their windfall:

After closing out their positions in the stock, Wong bought Markin a Rolex watch to thank him for the tips and paid some of Markin’s expenses for a Hawaiian vacation, which they went on together, they added.

The Rolex was worth about $40,000, the DOJ said. Wong also bought Markin a meal at a “three-Michelin-starred restaurant” in New York that cost over $1,000, and he purchased himself a home in Florida, according to the indictment.

And now they’re facing a boatload of charges: Markin is charged with nine counts of securities fraud and eight counts of tender offer fraud, one count of conspiracy and one count of making false statements; Wong with 11 counts of securities fraud, 10 counts of tender offer fraud, and one count of conspiracy.

Markin and Wong’s arrests are part of a larger insider trading sting. Manhattan U.S. Attorney Damian Williams noted this “should send a strong message to anyone who [is] even thinking about committing insider trading. Cut it out, because we’re watching.”

Kathryn Rubino is a Senior Editor at Above the Law, host of The Jabot podcast, and co-host of Thinking Like A Lawyer. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

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