A former Simpson Thacher & Bartlett LLP managing clerk who pleaded guilty in 2015 to insider trading may serve less time after a federal appeals court vacated his sentence and returned the case for resentencing.
The district court’s factual findings weren’t sufficient to support Steven Metro’s 46-month sentence, so resentencing is appropriate, according to the U.S. Court of Appeals for the Third Circuit’s Feb. 14 opinion.
Metro pleaded guilty to a five-year insider trading scheme in which he stole data on tender offers and mergers and acquisitions from his firm and gave it to a law school friend, Frank Tamayo.
Metro appealed after he was sentenced. He said the court was wrong to attribute the illicit profit of a third party—Vladimir Eydelman—to him for purposes of sentencing when he didn’t provide Eydelman with insider information, the opinion said.
When it comes to sentencing, “an insider trading tipper should not be held responsible for downstream trading of which he was totally unaware, as occurred here,” Metro’s attorney, Lawrence S. Lustberg, of Gibbons PC’s Newark, N.J., office, told Bloomberg Law.
It’s “only fair” for Metro’s sentence to include a third party’s profit if he’s “shown to have been acting ‘in concert’ with that person,” Lustberg said.
“Because that was not shown here, the Court of Appeals was clearly correct in holding that he must be re-sentenced,” Lustberg said, adding that he looks forward to obtaining “a sentencing that really reflects his conduct and not the unknown conduct of others.”
The Justice Department didn’t immediately respond to a request for comment.
Paper Chewing in Grand Central
Tamayo would meet his stockbroker, Eydelman, at New York’s Grand Central Station after receiving a tip from Metro, according to the Third Circuit’s opinion. Tamayo would write the tip on a piece of paper, show it to Eydelman, and then ingest the paper, the opinion said.
Metro said he wasn’t aware Tamayo was sharing tips with Eydelman, according to the opinion.
The court said the scheme made over $5.6 million in illicit profit for Tamayo, Eydelman, Metro, and others. Metro made $168,000 in profit, according to a previous statement by U.S. Attorney Paul J. Fishman.
The Justice Department also charged Tamayo and Eydelman in the scheme. Tamayo pleaded guilty in 2014, and Eydelman pleaded guilty in 2015.
The case is United States v. Metro, 2018 BL 49392, 3d Cir., No. 16-3813, 2/14/18.
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