“Post-It Notes Broker” Eydelman Gets Three Years for Insider Trading Conviction
Vladimir Eydelman, the former Oppenheimer & Co. and Morgan Stanley stockbroker who pled guilty two weeks ago to trading in advance of more than a dozen pending corporate mergers on behalf of himself and dozens of clients, was sentenced Friday to 36 months in prison.
The New Jersey resident also agreed to settle charges from the Securities and Exchange Commission that he traded on tips from a Simpson Thacher law firm employee passed to him through a mutual friend who was a customer of Eydelman. The case gained notoriety as the Post-It Note scandal because the middle-man passed Eydelman names of companies involved in pending deals on napkins and post-it-notes at New York’s Grand Central Terminal and then chewed up the papers.
In the brokerage world, Eydelman raised eyebrows because he moved from an Oppenheimer office where he had worked for almost ten years to Morgan Stanley as the insider trading was occurring during a period in which his production numbers flourished. He made the move after a customer complained to Oppenheimer that Eydelman had forged a signature giving him trading discretion for the customer.
The SEC alleged that after getting a tip, Eydelman typically gathered research about the target company and mailed it to the middleman, Frank Tamayo, to create a false paper trail with a justification for the trading. Tamayo allegedly allocated a portion of his profits for eventual payment back to the law firm employee, Steven Metro, in exchange for the inside information.
Eydeleman’s illegal trading for himself and dozens of clients resulted in more than $5.6 million in profits, the SEC alleged.
Metro was sentenced last October to 46 months in federal prison, and Tamayo was sentenced last week to a year and a day. Like Eydelman, they had all pleaded guilty in connection with their roles in the scheme.
As part of the settlement with the SEC, Eydelman is required to disgorge $1,236,657 of his ill-gotten gains and pay a monetary penalty of $1,236,657. He also has been barred from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally statistical rating organization and from participating in any offering of a penny stock.
The SEC’s litigation against Tamayo, Eydelman’s customer, is ongoing.