A longtime Morgan Stanley broker and financial advisor pleaded not guilty to trading on secret tips about pending mergers and acquisitions leaked by a Bank of America Corp. consultant.
Michael Siva, 55, got the information from a close friend, James Moodhe, whose daughter was dating the Bank of America technology consultant at the center of the case, Daniel Rivas, prosecutors said in an August indictment. In a statement, Morgan Stanley described Siva as a former wealth management employee and didn’t provide details about his apparent departure from the company.
Siva, of West Orange, New Jersey is one of seven people charged in the alleged scheme. Rivas and Moodhe have already pleaded guilty and are cooperating with the government. Prosecutors said Moodhe used code phrases on the phone and handwritten notes to provide the tips to Siva, after Moodhe’s daughter passed them on to him. Her boyfriend allegedly gave them to her to deliver to her father.
The others charged are friends and associates of Rivas and Moodhe, who created several "tipping chains" that benefited different groups, according to prosecutors. Rivas’s girlfriend wasn’t charged.
Moodhe passed Rivas’s inside information to Siva from at least 2015 to April 2017, so Siva could use it to execute profitable trades for himself and his clients, including Moodhe, prosecutors said. Their in-person meetings, at diners outside New York City, were intended to avoid detection, according to the U.S.
"During these meetings, Moodhe read from pieces of paper provided to him by Rivas, which contained detailed information about confidential impending deals, including ticker symbols, deal values and expected announcement dates," prosecutors said.
Made Millions
Siva and Moodhe made a total of more than $3 million by trading before and after deals were announced, while Siva also made thousands of dollars on commissions, the U.S. said.
One of Siva’s most profitable trades was a purchase of 30,000 shares of ZS Pharma on behalf of Moodhe and Siva’s clients, just before it was announced in 2015 that AstraZeneca Plc was buying the company for $2 billion. The men sold all their shares after the announcement and made a total of almost $600,000, prosecutors said,
In another set of allegedly corrupt trades, Siva and Moodhe in 2016 each purchased thousands of shares of St. Jude Medical Inc. just before its impending $25 billion acquisition by Abbott Laboratories. The men, neither of whom had invested in St. Jude Medical before, sold all their shares after the deal was publicly announced in April 2016, garnering a total of more than $450,000, the U.S. said.