Ex-Morgan Stanley Broker Pleads Not Guilty to Insider Trading

Michael Siva, a former Morgan Stanley broker (MS), has pleaded not guilty to criminal charges accusing him of insider trading. Siva is one of several people charged over their alleged participation in a group of “tipping chains” and trading on tips about upcoming acquisitions and mergers. The information was provided by Bank of America (BAC) consultant Daniel Rivas. Siva is said to have gotten the tips from the James Moodhe, who is the father of Rivas’ girlfriend.

Rivas and Moodhe have both pleaded guilty to the criminal charges accusing them of insider trading. They are cooperating with the government’s probe.

Moodhe is said to have shared Rivas’s tips with Siva from at least 2015 up through earlier this year. Siva allegedly used the information so he could make successful trades for clients as well as for himself. Moodhe and Siva allegedly met at eating places outside NYC during which time the former would read details about upcoming deals to Siva, including the value of the deals and when news about them was expected to go public. The two men allegedly made over $3M trading prior to and after the announcement of the deals.

For example, according to InvestmentNews, among Siva’s “most profitable trades” was when he bought 30,000 ZS Pharma shares for Moodhe and his own clients before it was announced that AstraZeneca Plc was purchasing the company for $2B. Prosecutors contend that after news of the acquisition became public, the alleged inside traders made nearly $600K in illicit profits. The two men also allegedly bought thousands of St. Jude Medical Inc. shares before Abbott Laboratories acquired that company for $25B. Moodhe and Siva made over $450K after news of the purchase were disclosed to the public.

Insider Trading Charges Brought in Case Involving Celator

In another recent insider trading case that has brought both criminal and civil charges, an ex-pharmaceutical company accountant and three others are accused of making trades based on market-moving news about Celator Pharmaceuticals, which is where CPA Evan R. Kita, used to work. According to the US Securities and Exchange Commission, Kita told two of his friend about the results of a clinical trial involving the company’s leukemia and that it was being acquired by Jazz Pharmaceuticals. When the positive outcomes for the drug were disclosed to the public, Celator’s stock went up over 400%.

The SEC contends that Kita’s friends, Richard Yu and Daniel Perez, bought the stock because of the tips that Kita shared with them and before the announcements about the drug trial results and the acquisition became public. Yu also allegedly tipped his dad, Chiang Yu, who also made trades beforehand.

All four men are charged with violating federal securities laws and SEC antifraud rules. The U.S. Attorney’s Office for the District of New Jersey has filed a parallel criminal case against them.

At The SSEK Partners Group, our securities fraud law firm works with investors in recovering their losses caused by fraud, negligence, or wrongdoing. Contact our investment fraud lawyers today and we can help you explore your legal options.

Ex-Morgan Stanley Broker Pleads Not Guilty to Insider Trades, Bloomberg, September 5, 2017

SEC Uncovers Wide-Reaching Insider Trading Scheme, SEC, August 16, 2017

The SEC Complaint in the Celator Pharmaceuticals Case (PDF)