A postal worker has been arrested in an insider trading case that previously accused two Wall Street workers of making at least $6.4 million with help from a Wisconsin forklift driver who leaked copies of a market-moving magazine, prosecutors said Thursday.
Jason Smith, 29, of Jersey City, N.J., was arrested on insider trading charges for allegedly leaking confidential information about a grand jury's probe of accounting fraud at the Bristol Meyers Squibb Company, prosecutors said.
Smith allegedly leaked the information to Eugene Plotkin, of Manhattan, a Harvard-educated Goldman Sachs Group Inc. analyst, and David Pajcin, a former Goldman Sachs analyst, who is cooperating with the government.
Plotkin and Pajcin traded and tipped others to trade in Bristol Meyers securities, betting that the stock price would decline once the outcome of the grand jury's investigation was announced, prosecutors said.
In April, the FBI arrested Plotkin and his college friend, Stanislav Shpigelman, 23, of Brooklyn, accusing them of benefiting from the scandal. Shpigelman was an analyst at Merrill Lynch & Co. Inc.'s mergers and acquisitions division.
A criminal complaint filed in U.S. District Court in Manhattan also accused Smith of participating in other attempts by Plotkin and Pajcin to gain inside information and trade on that information.
If convicted, Smith faces a maximum of 45 years in prison.
The Securities and Exchange Commission also added Smith to a civil insider trading complaint that already accused the others in the insider trading scheme.
The case included claims that Plotkin and Shpigelman discussed getting strippers to coax stock tips from investment bankers with inside knowledge of pending mergers and acquisitions.
The case was discovered by regulators who noticed unusually high trading volume before a merger announcement.
A closer look showed that a 63-year-old retired seamstress in Croatia — the aunt of one of the defendants — had made more than $2 million, Mark Schonfeld, regional director of the Securities and Exchange Commission, said previously. The SEC added Smith to a civil insider trading complaint that already accused 13 others in the case.
In a another scheme, Plotkin and Pajcin advertised for workers to land jobs at a printing plant, steal advance copies of BusinessWeek and tip them about companies discussed, prosecutors said.