UBS trader used coded emails to insider trade, SEC alleges

26 March 2010

A trader at UBS’ Global Healthcare Group has been charged for his role in an insider trading ring which made £1 million in illicit profits.

According to the Securities and Exchange Commission (SEC), Igor Poteroba, an investment banker at UBS, used coded emails to provide accomplice Aleksey Koval with confidential data on transactions involving pharmaceutical companies.

The messages described securities and money as “frequent flyer miles” and “potatoes”, the organisation explained.

Mr Koval and another man, Alexander Vorobiev, received tips which allowed them to place trades.

Robert Khuzami, director of the SEC’s Division of Enforcement, said: “They thought it was clever to use code words such as frequent flyer miles and wedding registry gifts to conceal their insider trading scheme.

“These words were code for nothing more than 'we are breaking the law'.”

The scheme is thought to have begun in July 2005 and involved insider information changing hands ahead of an estimated 11 mergers and acquisitions.

Some of the insider deals are thought to have taken place via brokerage accounts held in the name of Mr Koval and Mr Vorobiev’s wives.

By Jim Ottewill

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