Every week, we regale readers with stories of lawyers’ ethical lapses and other misconduct. But here’s a story demonstrating that the conduct of anyone who works at a law firm — including paralegals, assistants, clerks, and other staff — can be subject to the same scrutiny, and result in the same severe consequences, as that of lawyers.
Last week, the SEC filed an insider trading Complaint against a stockbroker named Vladimir Eydelman and Steven Metro. Although trained as a lawyer, Metro did not practice law; he worked as a managing clerk at Simpson Thacher & Bartlett. The Complaint asserts that, through an unnamed “middleman,” Metro leaked confidential information about pending deals that Simpson Thacher was working on to Eydelman, who then allegedly traded on the information. The Complaint describes a cloak-and-dagger scheme to avoid detection, including meetings under the Big Clock at Grand Central Station and tips written on napkins which were then eaten in an attempt to destroy physical evidence. It didn’t work.
According to the Complaint, Metro’s take on the more than $5 million reaped from the scheme amounted to about $150,000. But that’s not the only thing he got. He also got fired. And he got arrested.
Law firms (and in-house legal departments) should have clear policies on confidentiality and insider trading that apply not just to lawyers, but to all personnel. The policies should, at the very least, admonish individuals to maintain information about client matters confidential; prohibit the purchase or sale of securities when the individual or the firm has material inside information; and provide for a clearing process before an individual is allowed to purchase securities.
While Mr. Metro’s (former) position cries out for a clip from Kevin Smith’s 1994 movie “Clerks,” there is precious little from that movie that has anything do with confidentiality or insider trading (at least nothing that’s not offensive). I’ll settle
for this tutorial instead.