By Brian Baxter, From The Am Law Daily

The U.S. Securities and Exchange Commission announced Monday that it has formally settled its claims against mortgage banker Frank Tamayo, a cooperator in the agency’s insider trading case against former Simpson Thacher & Bartlett managing clerk and attorney Steven Metro.

Tamayo, who once studied law with Metro at the Touro Law Center in Central Islip, New York, has admitted to serving as a middleman between Metro and another individual who traded on stock tips involving Simpson Thacher clients. Enforcement officials claim that Tamayo used napkins and Post-it notes to pass along Metro’s tips, and then chewed up and sometimes swallowed the pieces of paper to demonstrate that the evidence was destroyed.

The SEC and federal prosecutors filed insider trading charges against Metro and Morgan Stanley stockbroker Vladimir Eydelman in March 2014, alleging that they traded tips via a middleman who met Eydelman near the giant clock and information booth in New York City’s Grand Central Terminal.

Tamayo (picture attached), a Brooklyn, New York-based mortgage lending officer formerly employed by Citibank, was revealed as the middleman in September 2014, when he reached a plea deal and cooperation agreement with federal prosecutors in New Jersey that saw him forfeit $1.06 million. The SEC brought civil charges against Tamayo that same month, claiming that he helped to facilitate the $5.6 million insider trading scheme.

Under the terms of Monday’s SEC settlement, Tamayo agreed to disgorge $1.06 million, although the amount will be covered by his previous deal with criminal prosecutors. The agency cited Tamayo’s “extensive cooperation” with its investigation.

Tamayo, 41, will also turn over other ill-gotten gains, such as his Audi Q7, and he agreed to testify against Eydelman and Metro. Officials claim Tamayo met with Metro in various bars and cafes in midtown Manhattan in order to obtain information on transactions involving Simpson Thacher clients including Arch Coal, Office Depot, People’s United Financial, Toshiba Medical Systems and Tyco International. The pair also made periodic trips together to Atlantic City, New Jersey, according to court records.

1. Ross Pearlson, co-managing partner and co-chair of the litigation group at West Orange, New Jersey-based Chiesa Shahinian & Giantomasi, and partner Matthew Beck have been representing Tamayo on both civil and criminal matters. Neither immediately responded to requests for comment about the SEC case. (Pearlson and Beck’s firm went through a rebranding earlier this year, shedding the name Wolff & Samson. As sibling publication the New Jersey Law Journal noted in April, the name change was due to the retirement of former founding partner David Samson, a key figure in the Garden State’s Bridgegate scandal.)

“Tamayo benefited from his decision to cooperate promptly with the SEC, enter into our cooperation program and provide significant information that assisted our investigation,” Robert Cohen, co-deputy chief of the markets abuse unit in the SEC’s enforcement division, said in a statement. Cohen and market abuse chief Daniel Hawke supervised the efforts of SEC attorneys Leigh Barrett, Jason Burt, Daniel Koster, John Rymas, Stephan Schlegelmilch, Carolyn Welshhans and Matthew Wong.

James Froccaro, a Port Washington, New York-based solo practitioner representing Metro, declined to comment on Monday. According to court records, Metro joined Simpson Thacher in 1999 and filed pleadings on behalf of lawyers at the high-powered Wall Street firm. He invoked his Fifth Amendment right not to incriminate himself nearly a year ago in the civil case.

Metro initially pleaded not guilty in January to criminal insider trading charges, but court records show that plea negotiations are now underway. Trenton-based U.S. District Judge Michael Shipp— the brother of former National Football League running back Marcel Shipp—has set a February 2016 trial date if the plea talks fall through.

Eydelman, who was forced last year to return $3 million in bonus earnings to Morgan Stanley, has also reached a plea deal with federal prosecutors. McElroy, Deutsch, Mulvaney & Carpenter senior litigation partner Walter Timpone in Morristown, New Jersey, who also briefly had a role in the Bridgegate drama, is representing Eydelman as he continues to iron out the details of his criminal plea. Timpone also did not return a call seeking comment.

The SEC’s cases against Metro and Eydelman have been put on ice pending the outcome of the criminal cases.

IMAGE: whispering executive Photo by air done / iStock

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