Well.
This
is
not
great
for
the
legal
profession.
The
DOJ
announced
an
indictment
yesterday
against
30
corporate
attorneys
and
financial
professionals
in
connection
with
a
sweeping
insider
trading
scheme
that
prosecutors
say
targeted
some
of
the
country’s
most
prominent
Biglaw
firms.
Federal
prosecutors
in
Boston
described
it
as
a
vast,
decade-long
scheme
that
netted
the
defendants
tens
of
millions
of
dollars
in
illicit
profits.
The
indictment
referenced
six
unnamed
“victim”
firms,
which
prosecutors
characterized
as
the
nation’s
premier
law
firms
—
and
given
one
of
the
defendant’s
résumés,
it
checks
out.
At
the
center
of
the
ring
is
Nicolo
Nourafchan,
a
Yale
Law
School
graduate
who,
before
all
this,
had
a
fairly
illustrious
Biglaw
career.
He
worked
at
Sidley
Austin,
Latham
&
Watkins,
Cleary
Gottlieb,
and
Goodwin
Procter.
The
indictment
accuses
him
of
accessing
law
firms’
internal
networks
to
acquire
non-public
information
on
pending
deals,
which
he
then
sold
to
others.
His
alleged
co-conspirator,
New
York
lawyer
Robert
Yadgarov,
worked
alongside
him
to
build
out
the
operation.
The
mechanics
of
the
alleged
scheme
are,
frankly,
audacious.
Nourafchan
and
Yadgarov
allegedly
recruited
lawyers
and
others
to
serve
as
sources
of
inside
information
in
exchange
for
payments
of
hundreds
of
thousands
of
dollars
in
cash.
They
then
fed
that
information
through
a
layered
network:
Nourafchan
and
Yadgarov
provided
inside
information
to
a
network
of
traders
and
middlemen,
who
placed
trades
on
the
tips
either
on
the
two
lawyers’
behalf
or
on
their
own
behalf,
and
many
then
passed
the
information
on
to
additional
traders,
according
to
prosecutors.
All
while
allegedly
using
burner
phones,
coded
language,
and
in-person
meetings
to
hide
their
actions.
The
iRobot
episode
is
a
particular
highlight
of
the
indictment,
and
not
in
a
good
way.
In
June
2022,
while
on
a
“leave
of
absence”
from
the
firm
advising
iRobot,
Nourafchan
viewed
confidential
materials
about
the
deal
on
the
law
firm’s
document
management
system,
despite
not
working
on
the
matter.
A
co-defendant,
Simon
Fensterszaub,
then
allegedly
traded
on
that
information.
The
Amazon-iRobot
deal
was
eventually
abandoned
over
antitrust
concerns,
but
the
alleged
trading
happened
well
before
that.
The
breadth
of
the
charges
reflects
how
far
the
tentacles
of
this
alleged
scheme
reached.
Sixteen
defendants
were
charged
on
10
counts
including
securities
fraud,
money
laundering
conspiracy,
aiding
and
abetting,
and
obstruction
of
justice.
An
additional
five
defendants
face
securities
fraud,
conspiracy
to
commit
securities
fraud,
and
money
laundering
conspiracy
charges.
The
remaining
nine
defendants
were
charged
with
securities
fraud
conspiracy.
The
indictment
also
referenced
unnamed
co-conspirators
who
worked
at
Biglaw
firms
as
recently
as
this
year,
meaning
this
story
may
not
be
fully
told
yet.
Nineteen
of
the
defendants
were
arrested
on
Wednesday.
Two
defendants
located
in
Russia
and
Israel
are
considered
fugitives.
The
indictment
does
not
name
the
six
victim
firms,
but
the
paper
trail
of
Nourafchan’s
employment
history
combined
with
the
nearly
30
M&A
deals
allegedly
implicated
in
the
scheme
suggests
this
touches
some
of
the
largest
and
most
prominent
M&A
practices
in
the
country.
A
Latham
spokesperson
offered
the
following
statement,
“The
former
associate
charged
today
has
not
been
associated
with
our
firm
for
five
years,
and
the
conduct
as
alleged
would
reflect
a
serious
violation
of
our
robust
policies
and
procedures.”
Representatives
of
Cleary
Gottlieb,
Sidley
Austin,
and
Goodwin
Procter
did
not
respond
to
requests
for
comment.
Kathryn
Rubino
is
a
Senior
Editor
at
Above
the
Law,
host
of The
Jabot
podcast,
and
co-host
of Thinking
Like
A
Lawyer.
AtL
tipsters
are
the
best,
so
please
connect
with
her.
Feel
free
to
email her with
any
tips,
questions,
or
comments
and
follow
her
on
Twitter @Kathryn1 or
Bluesky @Kathryn1