It’s like the cast of a new “Ocean’s 11” movie: a Greek with a chain of Manhattan restaurants, the son of a pharmaceuticals company board member, a poker-playing securities trader in Monaco, a Goldman Sachs Group Inc. vice president and a London investment banking couple who called each other “Pops” and “Popsy.”
They’re all accused of participating in a “wide-ranging international insider-trading ring.” U.S. prosecutors unveiled the charges in the past week, piggy-backing on similar actions taken in France and the U.K. in recent years. Taken together, it’s a dramatic assault on a network of bankers and traders operating on both sides of the Atlantic who allegedly reaped tens of millions of dollars in illicit profits.
And yet more is likely to come. It’s unclear from the U.S. complaints who, if anyone, is the mastermind behind the scheme. One trader in Switzerland, who hasn’t been charged, appears in multiple indictments, but isn’t identified.
While the profits were allegedly big, and the scheme expansive, the basics were relatively simple.
Investment bankers got information about pending mergers and acquisitions at work, according to the U.S. Justice Department and the Securities and Exchange Commission. They then sold the information to middlemen, who passed it on to traders. The bankers were repaid with cash, expensive holidays, luxury watches and other benefits, according to court filings.
The ring had access to dozens of insider tips and used in-person meetings and “burner” cell phones to avoid detection. To further cover their tracks, the insiders traded using derivatives that are illegal in the U.S. and hard to track by regulators.
For example, the group traded in shares of Onyx Pharmaceuticals and Omnicare Inc. -- among more than a dozen other companies -- using contracts for difference, which allow investors to make amplified wagers with just a small down payment.
At the same time, members of the ring tipped off financial news organizations, including Bloomberg News, hoping to benefit from a pop in the stock price when reporters independently corroborated the information and published the news.
Among the “Oceans 11” crew is George Nikas, a Greek who remains at large in his home country. He allegedly placed most of his trades using CFDs.
The 54-year-old has businesses in Europe and the U.S., including GRK Fresh, a New York chain of Greek fast-food restaurants. Prosecutors say he got information from Bryan Cohen, a Goldman Sachs vice president in New York. While at one of Nikas’s restaurants, Cohen, 33, would get information about pending takeovers by using his burner phones and woudl then tell Nikas about deals like one tied to Buffalo Wild Wings Inc., according to prosecutors. Cohen pleaded not guilty in a Manhattan court Tuesday.