A former junior-level investment banker at Merrill Lynch pleaded guilty today to insider trading after providing tips about upcoming mergers as part of a scheme that generated millions of dollars of profit.
Stanislav Shpigelman (23) pleaded guilty to one count of insider trading and faces a maximum of 20 years in prison, but under federal sentencing guidelines is likely to serve between three and four years under his plea agreement when he is sentenced November 17th.
"I knew this was wrong. I want to take the opportunity to apologize," Shpigelman said with his voice shaking, surrounded by family members in a hearing before US District Judge Kenneth Karas in Manhattan federal court.
Prosecutors have accused former Goldman Sachs Group employees David Pajcin and Eugene Plotkin of leading a $6.7 million insider trading ring that included trading off stolen advance copies of BusinessWeek magazine as well as recruiting employees at investment banks for inside tips.
Shpigelman agreed to provide Plotkin (26) and Pajcin (29) information about six upcoming mergers and acquisitions that netted the ring $6.4 million in illegal profits in return for promises of cash payments.
The deals included Procter & Gamble Co.'s acquisition of Gillette in January 2005 and Adidas' acquisition of Reebok in August.
During his plea Shpigelman told the judge he provided his co-conspirators information by cell phone even when he knew he was not allowed to discuss upcoming deals.
"They pressured me and said if I helped them they would take care of me," said Shpigelman, who was employed as an analyst in the mergers and acquisitions division of Merrill Lynch.
Prosecutors said evidence against Shpigelman included e-mails between Shpigelman and ring members, Merrill Lynch records and testimony of former fellow employees, as well as $8,000 seized in a safe deposit box.
Shpigelman made frequent attempts to learn about pending deals on which other Merrill Lynch employees were working, according to a U.S. Securities and Exchange Commission complaint.