Fraud Facilitated by Advance Copies of BusinessWeek

April 11, 2006 ( - A bond analyst at Goldman Sachs, a junior-level banker at Merrill Lynch and a worker at the plant that prints BusinessWeek magazine have been arrested, charged with participating in an international insider trading ring that netted $6.7 million and involved more than a dozen people.

Reuters reports that authorities said the schemes involved stealing pre-publication copies of BusinessWeek magazine to gain advance knowledge of share tips and persuading an investment banker to pass on details about upcoming mergers.   The three face insider trading and securities fraud charges.

The case is linked to the arrest last year of David Pajcin, a former Goldman employee who allegedly made stock trades from stolen pre-publication copies of BusinessWeek, according to Reuters.

The Securities and Exchange Commission (SEC) said the schemes were orchestrated by Eugene Plotkin, the Goldman Sachs bond analyst and Pajcin, who persuaded the Merrill Lynch banker, Stanislav Shpigelman, to provide tips on upcoming mergers in return for a share of trading profits.   Plotkin and Pajcin traded stocks based on those tips, making at least $6.4 million in illicit gains, according to the complaint.

In a second scheme, Plotkin and Pajcin recruited two individuals, including Juan Renteria, to obtain jobs at a printing plant, steal advance copies of BusinessWeek and tip them about the names of companies discussed in the magazine’s “Inside Wall Street” column, on the trading day before it hit the newsstands.   The two traded in approximately 20 different stocks on this basis, earning $340,000 in illicit gains, the complaint said.

Plotkin, aged 26, faces a maximum penalty of 70 years in prison; Shpigelman, aged 23, could get up to 55 years; and Renteria, aged 20, could be jailed for 15 years.

Separately, the SEC filed civil insider trading charges against Shpigelman, Plotkin, Renteria and a number of people who allegedly received inside tips, including Pajcin’s aunt Sonya Anticevic, a former underwear factory worker living in Croatia.

Shpigelman has been placed on administrative leave from Merrill Lynch.