A Morgan Stanley broker was among five people arrested in connection with an insider trading ring that generated more than $5 million of profits over a three-year period.
Michael Siva of West Orange, N.J. and a broker at Morgan Stanley's Morristown, N.J., office, was accused of using inside information to make profitable trades for his clients, earning commissions for himself in the process. The compalints alleges that Mr. Siva also traded on behalf of himself and his wife based on two of the tips he received.
The five people allegedly were involved in insider trading from August 2014 through April 2017, based on tips from a Bank of America employee about dozens of pending corporate transactions.
In addition to Mr. Siva, those arrested were Roberto Rodriguez of Miami Gardens, Fla.; Rodolfo Sablon of Miami; Jhonatan Zoquier of Englewood, N.J.; and Jeffrey Rogiers of Oakland, Calif.. They were charged in a 54-count indictment.
Daniel Rivas, who allegedly furnished the tips while working in Bank of America's capital markets technology group, and James Moodhe, the father of Mr. Rivas' girlfriend, have both pleaded guilty to charges of fraud, conspiracy and making false statements to Federal Bureau of Investigation agents. Mr. Rivas later worked at the Royal Bank of Canada, according to Reuters.
All seven defendants face related U.S. Securities and Exchange Commission civil charges.
Prosecutors for the U.S. Attorney's Office for the Southern District of New York said that Mr. Rivas leaked material nonpublic information about potential mergers, acquisitions and tender offers, involving clients and prospective clients, more than 50 times to the co-conspirators, who then traded on the tips. The trading, which took place in 30 transactions, involved the takeovers of St. Jude Medical by Abbott Laboratories and Monsanto by Bayer, the SEC said.
The charges against the defendants carry maximum prison terms of 20 years, in most cases.