A married couple, both lawyers, pleaded guilty to conspiracy and securities fraud in what was described as one of the biggest insider-trading operations since the 1980s, a US$15 million scam that reached into some of the nation's top financial firms.
Randi Collotta, 30, a former employee of Morgan Stanley and Co in Manhattan, and her husband, Christopher Collotta, 34, who worked in private practice, were among 13 people who were criminally charged in the case.
The couple received US$9,000 in kickbacks for inside tips that generated more than US$600,000 in illegal profits, Assistant US Attorney Andrew Fish said on Thursday.
PHOTO: AP
In a plea deal with the government, Randi Collotta agreed not to appeal any sentence as long it's between one year and 18 months in prison. Christopher Collotta vowed not appeal any sentence from 10 months to 16 months in prison. US District Judge Victor Marrero set sentencing for Sept. 7.
They remain free on US$250,000 bail each.
Randi Collotta, sobbing through much of the proceeding, said she agreed in September 2004 with her husband to provide inside information she obtained in her job at Morgan Stanley to a broker, Marc Jurman of Palm Beach Garden, Florida. Jurman pleaded guilty in March to conspiracy and securities fraud. He was also named in a complaint issued by the Securities and Exchange Commission (SEC) earlier this year.
She said she told her husband about pending mergers and acquisitions between September 2004 and July 2005.
"I knew my husband would share the information with Marc Jurman," she said.
She added: "I understood my actions were wrong and I accept responsibility for what I did."
Fish said Jurman shared that inside information with others, resulting in several hundred thousand dollars in illegal profits beyond the US$38,500 Jurman pocketed after trading securities based on what the Collotas had told him.
The government said the trading ring relied on insiders at Morgan Stanley and UBS Securities LLC to steal valuable secrets from the companies. It also alleged a Banc of America Securities LLC broker accepted kickbacks and that two former representatives of Bear Stearns and Co obtained proprietary UBS information.
The SEC has described the case as one of the most pervasive Wall Street insider trading rings since Ivan Boesky and Dennis Levine engaged in their notorious insider-trading schemes during the 1980s.
According to prosecutors, Randi Collotta was an associate in Morgan Stanley's global compliance division during the share trading conspiracy.
When they announced the case in March, prosecutors and SEC officials said the defendants included registered representatives, compliance personnel and hedge fund portfolio managers who traded hundreds of tips over five years. US Attorney Michael Garcia said Wall Street professionals repeatedly traded on secrets revealed to them by insiders at UBS and Morgan Stanley.
Stock upgrades and downgrades by UBS and impending corporate acquisitions involving Morgan Stanley clients were relayed before the news hit the market, authorities said.
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