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Eugene M. Plotkin, formerly a research analyst at Goldman Sachs, was convicted of insider trading, and sentenced on January 4, 2008 to 57 months in jail. He was ordered to pay a $10,000 fine and to forfeit up to $6.7 million, the amount of the scheme's illegal profits. Plotkin pleaded guilty to conspiracy to commit securities fraud and eight counts of insider trading. The efforts were described in 2008 as "one of the broadest insider-trading conspiracies in years". Plotkin and his co-conspirator, David Pajcin, hired a plant who would deliver information from early views of Business Week before the information in the issues went public, paid an analyst for information on upcoming takeovers and used the information to trade on multiple accounts, including those set up on behalf of family members.

Background

Plotkin, born in Moscow, is a Russian immigrant to the United States. He spent a year at the California Institute of Technology. and transferred to Harvard University at the beginning of his sophomore year, living in Lowell House and concentrating in economics. Plotkin became heavily involved in ballroom dancing, which he continued after graduation, both competing under the name "Gene Michael" (achieving a couples ranking of 49 at DanceSportInfo.net) and giving lessons. In 2003, he directed and starred in a low-budget indie film entitled One Way or Blindside. In the movie, which was not distributed, Plotkin plays a successful Wall Street banker who is framed for theft.

Insider trading

Plotkin worked with David Pajčin, a former employee of Goldman Sachs, who has cooperated with the prosecution. The prosecution began after regulators noticed unusually high trading volume before a merger announcement and discovered that Pajčin's aunt had made more than $2 million.

Sonja Antičević, a 63 year old retired tailor from Omiš, Croatia who was living on a pension of about $263 a month and occasionally worked as a cleaning lady, was at first accused by the U.S. Securities and Exchange Commission of buying $130,000 of Reebok call options in the 2 days before Reebok was taken over by Adidas-Salomon AG. She told the Associated Press that she "never bought a stock and I have no idea how that works." 8,675 Reebok options were traded on those two days, more than 50 times the usual amount. The SEC investigation was prompted by the timing of the unusual volume.

As alleged in the complaint, in one scheme, Plotkin and Pajčin persuaded a mergers and acquisitions analyst at Merrill Lynch to provide tips on upcoming mergers in return for a share of the trading profits. In another scheme, Plotkin and Pajčin recruited two individuals to obtain jobs at a Quad/Graphics plant in Hartford, Wisconsin, where BusinessWeek is printed for distribution in the northern United States. Those workers would acquire advance copies hot off the press and tip Plotkin and Pajčin on the names of companies discussed favorably in the “Inside Wall Street” column before the magazine became public. A grand juror allegedly passed illegal tips in another part of the scam.

Plotkin and Pajčin traded on the inside information, initially in an account in Pajčin’s name and later, in accounts in the names of others in Europe and the United States. Plotkin and Pajčin also tipped several individuals in the United States and Europe in return for a share of their trading profits. In total, Plotkin and Pajčin traded in at least 25 stocks within one year based on inside information obtained through these schemes.

A SEC official described the scheme as "one of the most widespread, varied and premeditated insider-trading rings we have ever prosecuted."

Plotkin pleaded guilty to conspiracy to commit securities fraud and eight counts of insider trading. Most of the profits have been secured by federal authorities who froze bank accounts when the fraud was discovered.

David Pajčin, a former Goldman Sachs analyst, has pleaded guilty to charges in the case and is cooperating with the government.

Plotkin introduced Pajčin to his college friend Stanislav Shpigelman in 2004 at a Russian day spa and sauna in lower Manhattan. Shpigelman worked as an analyst at Merrill Lynch & Co.'s mergers-and-acquisitions division. Shpigelman pleaded guilty to conspiracy to commit insider trading and was sentenced in 2008 to more than three years in prison.

References

1. Insider dealing sentence highlights crackdown, Financial Times, Ben White, January 5, 2008, accessed January 6, 2008
2. de la Merced, Michael J. (January 19, 2008). "Leader of Insider Trading Scheme Free After 2 Years". New York Times. Retrieved February 29, 2012.
3. ^ Ex-Goldman Associate Sentenced to More Than 4 Years for Inside Trades New York Times January 4, 2008
4. Ex-Goldman worker gets five years BBC Jan 4 2008
5. ^ Anna Schneider-Mayerson, "Tough Traders Don't Dance", The New York Observer, April 24, 2006.
6. Claire M. Guehenno, "Grad Pleads Guilty to Insider Trading: Plotkin '00 could serve five to six years in prison", The Harvard Crimson, September 2, 2007.
7. ^ Jenny Anderson & Michael J. de la Merced, "An Insider-Trading Case With a B-Movie Plot", The New York Times, April 30, 2006.
8. Forbes.com. 8/08/05
9. Securities Litigation Watch 8/05/05
10. The Wall Street Journal, 8/08/05, p. C3, “SEC Wins Court Order in Case Prompted by Reebok Call Trades.”
11. "SEC Complaint Charges International Insider Trading Ring, Including Personnel at Goldman Sachs and Merrill Lynch". Washington, DC: Securities and Exchange Commission. 11 April 2006. Retrieved 27 February 2012. {{cite web}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)
12. "Feds charge three with insider trading; Group worked with M&A bankers, used stolen magazines". Marketwatch. 11 April 2006. Retrieved 27 February 2012. {{cite web}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)
13. 'SEC Complaint Charges International Insider Trading Ring, Including Personnel at Goldman Sachs and Merrill Lynch',
14. The Associated Press, 'Former Goldman Sachs Analyst Sentenced for Insider Trading',

External links

• New York Magazine, White Men with Money, The Dance Ends for Eugene.
• American Greed Episode 22:A Scam Exposed: Strippers and Inside Trading

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• Living people
• American ballroom dancers
• American financial analysts
• American investment bankers
• Russian emigrants to the United States
• American white-collar criminals
• California Institute of Technology alumni
• Goldman Sachs people
• Harvard University alumni
• People convicted of insider trading