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According to a press release from the United States Attorney’s Office for the District of New Jersey, a stock trader who took part in an insider trading case has pleaded guilty. The case involved former law firm associated Matthew Kluger. The stock trader pleaded guilty to all four counts charged against him on Thursday in Newark federal court, according to AmLaw Daily.
The stock trader in question, Garrett Bauer, was arrested back in April for his role in an insider scheme. Prosecutors working the case claim that there was $37 million netted in the scheme based on illegal gains. The trader split the money with Kluger and mortgage broker Kenneth Robinson. The four charges filed against Bauer were securities fraud, conspiracy to commit money laundering, conspiracy to commit securities fraud and obstruction of justice.
Robinson was a former conspirator in the case who decided to turn informant. He pleaded guilty back in April to one count of conspiracy to commit securities fraud and two counts of securities fraud. Robinson originally told the court that the scheme, which came to an end in March and began in 1994, started when Kluger worked with Cravath Swaine & Moore as a summer associate.
Kluger stole documents detailing corporate mergers and acquisitions from Am law firms that he worked at since 1994. Those firms include Cravath; Fried, Frank, Harris, Shriver & Jacobson; Skadden, Arps, Slate, Meagher & Flom; and Wilson, Sonsini, Goodrich & Rosati. All three men would have shares purchased for them by Bauer, who received merger information from Robinson, who obtained it from Kluger.
As a part of the scheme, federal prosecutors announced that the three men would trade ahead of 30 transactions. Upon hearing that federal investigators had searched the home of Robinson, Bauer destroyed a prepaid cellphone he used to communicate with Kluger and Robinson. This is where the obstruction of justice charge originates. At a New York City McDonald’s, Bauer broke the phone into two pieces and dispensed the pieces into two separate trashcans.
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“After taking the lion’s share of the $37 million in profits, Bauer now faces punishment for conduct that undermines the fairness of our financial markets and the public’s trust in the safety of its investments,” U.S. Attorney for New Jersey Paul Fishman said in a statement.
The sentencing date for Bauer is scheduled for March 13. He agreed to forfeit cash and assets in excess of $23 million as a part of his guilty plea for the four counts.
“Mr. Bauer has entered a plea of guilty to the charges and by doing so is on his first step towards going on with his life,” Michael Bachner told The Am Law Daily.
Kluger was charged in April and has yet to enter a plea. He was charged with one count of conspiracy to commit securities fraud and two counts of securities fraud.
