Former UBS Executive Director Must Forfeit $15.81 Million in Illegal Profits and Serve 6 1/2 Year Prison Term for Insider Trading

In the U.S. District Court for the Southern District of New York, former UBS Securities LLC Executive Director Mitchell Guttenberg was ordered to forfeit $15.81 million in alleged illegal profits, as well as serve 78 months in prison. Guttenberg is accused of taking part in an insider trading scheme that generated millions of dollars for its participants. Earlier this year, he pleaded guilty to six counts of securities fraud and conspiracy.

Guttenberg allegedly sold material nonpublic data provided by UBS stock analysts regarding upgrades and downgrades before the information became available to the public. Tips included ratings change information about numerous stocks, including Whole Foods Market Inc, Amgen Corp, Caterpillar Inc., and Union Pacific Corp.

Trader David Tavdy, hedge fund manager Erik Franklin, and others allegedly paid Guttenberg for the information, as well as a share of their profits. Tavdy and Franklin, who are codefendants in the insider trading scam case, are among those who then passed on the data to other individuals.

Hundreds of trades took place because of the nonpublic data provided by Guttenberg. The trades resulted in over $15 million in illegal profits for the former UBS executive director, while others made over $17.5 million.

Guttenberg and 12 other individuals, mostly former employees at Morgan Stanley, Bank of America Corp, and Bear Stearns Co., Inc., were criminally charged for their involvement in the insider trading ring. Investigators say the participants tried to conceal their illegal actions by conducting meetings at restaurants, using disposable cellular phones, and coming up with coded text messages.
Our stockbroker fraud lawyers represent investors who have suffered financial losses because of broker-dealer misconduct. Contact Shepherd Smith Edwards & Kantas LTD LLP today.