United States Attorney
Southern District of New York
FOR IMMEDIATE RELEASE CONTACT: U.S. ATTORNEY’S OFFICE
MARCH 21, 2011 ELLEN DAVIS, CARLY SULLIVAN,
PREET BHARARA, the United States Attorney for the
Southern District of New York, announced that IGOR POTEROBA, a
former investment banker in the Healthcare Group of UBS
Securities LLC (“UBS”), was sentenced today to 22 months in
prison for his participation in an insider trading scheme in
which he passed material, non-public information regarding six
mergers and acquisitions that certain UBS clients were
contemplating to a co-conspirator, ALEXEI P. KOVAL, who then
traded on this information, generating hundreds of thousands of
dollars in illicit profits. POTEROBA, 37, was sentenced in
Manhattan federal court by U.S. District Judge PAUL A. CROTTY.
Manhattan U.S. Attorney PREET BHARARA said: “The
message of today’s sentence of Igor Poteroba should be crystal
clear — this Office, along with our law enforcement partners,
will not abide corrupt insiders who use their privileged
positions to steal their companies’ valuable secrets and cash in
on them. Professionals who engage in insider trading will be
punished to the full extent of the law.”
According to documents previously filed in Manhattan
Since 2006, POTEROBA served as an Executive Director at
UBS where he obtained material, non-public information (the “UBS
Inside Information”) regarding certain mergers and acquisitions
involving the following six publicly-traded healthcare companies:
Guilford Pharmaceuticals, Inc., Molecular Devices Corporation,
PharmaNet Development Group, Inc., Via Cell, Inc., Millennium
Pharmaceuticals, Inc., and Indevus Pharmaceuticals, Inc.
(collectively, the “Healthcare Companies”). In violation of his
duties of trust and confidence, he then disclosed the UBS Inside
Information to KOVAL, who in turn disclosed the UBS Inside
Information to another co-conspirator (“CC-1”).
As part of the scheme, POTEROBA typically tipped KOVAL
by telephone in advance of a public announcement that one of the
Healthcare Companies was to be acquired. Shortly after receiving
such a call, KOVAL and CC-1 purchased securities in the Company.
Following the public announcement of the acquisition, KOVAL and
CC-1 quickly sold the securities they had purchased. KOVAL and
CC-1 executed dozens of securities transactions based on UBS
Inside Information provided by POTEROBA. POTEROBA then received
a portion of the profits from KOVAL.
* * *
In addition to his prison term, Judge CROTTY sentenced
POTEROBA, of Darien, Connecticut, to three years of supervised
release and ordered him to forfeit $465,095.21, representing the
amount of foreseeable proceeds obtained as a result of the
securities fraud offenses. Judge CROTTY also ordered POTEROBA to
pay a $25,000 fine and will determine the amount of restitution
at a later date.
POTEROBA’s co-defendant, ALEXEI KOVAL, 37, of Chicago,
Illinois, and Pasadena, California, pled guilty to related
charges on January 7, 2011, and is scheduled to be sentenced on
May 24, 2011, at 4:00 p.m., before Judge CROTTY.
Mr. BHARARA praised the investigative work of the FBI.
Mr. BHARARA also thanked the U.S. Securities and Exchange
Commission for its assistance in the investigation.
This case was brought in coordination with President
BARACK OBAMA’s Financial Fraud Enforcement Task Force, on which
Mr. BHARARA serves as a Co-Chair of the Securities and
Commodities Fraud Working Group. President OBAMA established the
interagency Financial Fraud Enforcement Task Force to wage an
aggressive, coordinated, and proactive effort to investigate and
prosecute financial crimes. The task force includes
representatives from a broad range of federal agencies,
regulatory authorities, inspectors general, and state and local
law enforcement who, working together, bring to bear a powerful
array of criminal and civil enforcement resources. The task
force is working to improve efforts across the federal executive
branch, and with state and local partners, to investigate and
prosecute significant financial crimes, ensure just and effective
punishment for those who perpetrate financial crimes, combat
discrimination in the lending and financial markets, and recover
proceeds for victims of financial crimes.
This case is being handled by the Office’s Securities
and Commodities Fraud Task Force. Assistant U.S. Attorney
MARISSA MOLÉ is in charge of the prosecution.