A former Morgan Stanley broker plans to plead guilty for trading on secret tips about pending mergers that were leaked by a Bank of America Corp. consultant, prosecutors said.
The broker, Michael Siva, was one of seven people charged with securities fraud last year. Prosecutors said Siva, of West Orange, New Jersey, got the tips from a close friend, James Moodhe, whose daughter was dating the consultant, Daniel Rivas.
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Mr. Rivas and Mr. Moodhe had already pleaded guilty and were cooperating with prosecutors when the charges were handed down, and the four others have also admitted wrongdoing or are planning to do so. Prosecutors in New York disclosed Mr. Siva's planned plea in a letter to the judge Wednesday, saying he would plead guilty even if he doesn't have a deal with the government.
Mr. Siva's lawyer, Paul Shechtman, didn't immediately respond to a phone message left at his office seeking comment on Wednesday's filing.
Mr. Rivas gave handwritten tips to his girlfriend to give to her father, who then passed them on to Mr. Siva using code phrases on the phone or by reading them aloud at secret meetings, prosecutors said. The other defendants are friends and associates of Mr. Rivas and Mr. Moodhe, who allegedly created tipping chains." Mr. Rivas's girlfriend wasn't charged.
Mr. Moodhe passed Mr. Rivas's information to Mr. Siva from at least 2015 to April 2017, so Mr. Siva could use it to trade for himself and his clients, including Moodhe, prosecutors said. Their in-person meetings at diners outside New York City aimed to avoid detection, according to prosecutors. Mr. Siva and Mr. Moodhe made more than $3 million, and Mr. Siva made thousands of dollars on commissions, the U.S. said.
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Mr. Rivas was a project consultant in Bank of America's capital markets technology group in New York. As a member of the team responsible for supporting the bank's computer system, he had access to a deal-tracking system that contained data about corporate transactions, including impending mergers, acquisitions and tender offers, according to the U.S.
The case is U.S. v Siva, 17-cr-503, U.S. District Court, Southern District of New York (Manhattan).
