A former Wilson Sonsini Goodrich & Rosati PC attorney passed mergers and acquisition data in an insider-trading scheme that netted more than $32 million in illicit profits, U.S. prosecutors charged today.
Matthew Kluger stole non-public data on companies including Sun Microsystems Inc., 3Com Corp. and Acxiom Corp. (ACXM), according to a Federal Bureau of Investigation arrest complaint. Kluger passed tips to a middleman who gave them to Garrett Bauer, a stock trader who was arrested today, according to the complaint. Bauer made more than $30 million on the scheme, the middleman more than $875,000, and Kluger more than $500,000, U.S. Attorney Paul Fishman said at a news conference in Newark, New Jersey.
Kluger, who worked in the Washington office of Wilson Sonsini from December 2005 to March 2011, also passed illegal tips when he worked at Skadden Arps Slate Meagher & Flom LLP from 1998 to 2001 and during his employment at Cravath Swaine & Moore LLP from 1994 to 1997, according to the FBI complaint.
The scheme “amounts to nothing short of a highly organized criminal enterprise designed and carried out by industry professionals and fueled by intense greed,” said Daniel M. Hawke, chief of the U.S. Securities and Exchange Commission market abuse unit, at the news conference.
“Kluger had access to inside information concerning clients’ potential sales and mergers,” according to the FBI complaint. “While at Cravath, Skadden and Wilson Sonsini, Kluger repeatedly violated his fiduciary and other duties of trust to the firms and their clients by providing inside information” to Bauer and the conspirator.