Federal Indictments Uncover Decade-Long Insider-Trading Ring Within Elite Law Firms

On Wednesday, the Department of Justice unsealed two complaints charging 30 individuals with a decade-long insider-trading scheme that used merger-and-acquisition data from white-shoe law firms. Prosecutors say the network stole nonpublic information on 30 deals, communicated via encrypted apps, burner phones and coded terms such as “flights” and “coffee,” and earned tens of millions of dollars. Defendants were based in United States, Israel and Russia.

Newsweek

The first indictment named 16 attorneys, traders and intermediaries; the second added five more. The accused include U.S. attorneys, a Russian national and an Israeli national. FBI Boston Division and U.S. Attorney’s Office for the District of Massachusetts led the probe, aided by partners in New York and California.

Newsweek

The scheme involved 30 individuals across three continents who accessed 30 merger-and-acquisition deals, earning tens of millions of illicit profits. They used encrypted apps, burner phones and coded terms such as “flights” and “coffee,” and funneled payments through cash, loans, shell companies and accounts of friends or relatives.

Newsweek

The case shows how attorney-client privileged data can be exploited, challenging ethical duties. Regulators view the indictments as a signal of white-collar enforcement, and investors may doubt market fairness if insider access appears pervasive.

Newsweek

Special Agent Ted E. Docks said the arrests dismantled a “large-scale, decade-long, organized criminal network” that turned privileged data into “bandit” profits. U.S. Attorney Leah B. Foley said the conduct “took advantage of the special access and ethical duties that come with a law license.” U.S. Attorney’s Office warned that perceived favoritism could drive investors from the markets, harming the economy.

Newsweek

• “With today's arrests, the FBI has dismantled a large-scale, decade-long, international organized criminal network of corporate attorneys and financial professionals who are accused of stealing and trading on material, nonpublic information from several of our nation’s leading law firms, including one right here in Massachusetts. Everyone charged today is accused of scoring significant profits from expected market moves and making out like bandits. That’s not merely gaming the system—it’s a federal crime,” — Ted E. Docks, FBI Boston Division

Newsweek

• “The trading on unannounced financial news alleged here not only violated the securities laws, but it also took advantage of the special access and ethical duties that come with a law license,” — Leah B. Foley, United States Attorney

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• “If the American people believe that trading is only for the connected, they will keep their investment and retirement savings out of the markets, which will hurt our economy.” — U.S. Attorney’s Office

Newsweek

All 30 defendants will appear in federal court this week. The DOJ said additional charges may follow and sentencing will address financial gains and professional-duty violations.

Newsweek