SimpsonThatcher

The former managing clerk of Simpson, Thacher & Bartlett, who admitted to peeking at the firm’s mergers and acquisitions files for stock tips to be used in a $5.6 million insider trading scheme, was handed a nearly four-year prison term in New Jersey federal court.

Steven Metro appeared in Trenton before U.S. District Judge Michael Shipp in a Sept. 14 sentencing hearing in the case, in which he was charged with passing along information about several Simpson Thacher client transactions from 2009 to 2013.

Those deals included a $530 million investment in client Sirius XM Holdings Inc. by Liberty Media, which helped the former avoid bankruptcy, as well as multibillion-dollar deals involving Arch Coal Inc. and Tyco International Ltd., The American Lawyer previously reported.

Metro’s 46-month sentence was less than the statutory guideline of 57 to 71 months, according to his attorney, James Froccaro Jr.

According to the U.S. Attorney’s Office for the District of New Jersey, Metro rifled through electronic client files for certain terms, such as “merger agreement” or “engagement letter,” and subsequently shared the information with a friend and former law school classmate, Frank Tamayo, during meetings at Manhattan bars and coffee shops.

Metro’s practice was to simply share names of target companies—for whom the group planned to buy stock—to Tamayo, who in turn delivered them to stockbroker Vladimir Eydelman in the form of napkins or slips of paper when the two met at Grand Central Terminal.

Metro is a law school graduate but, as managing clerk, he was not practicing law. He typically worked on litigation matters and was not personally involved in the M&A transactions, according to the American Lawyer report.

Tamayo afterward would eat the written ticker symbols to destroy the evidence, prosecutors said, and Eydelman would buy securities for himself as well as Tamayo, and then sell them off once prices climbed.

The first illicit transaction allegedly netted them about $7,000, which was reinvested repeatedly over a roughly five-year period. By October 2013, they had made moves in advance of at least 13 corporate transactions, according to prosecutors.

Metro, 42, of Katonah, New York, pleaded guilty last November to one count each of securities fraud and conspiracy to commit securities and tender-offer fraud.

In addition to the prison term, Metro also was sentenced to three years of supervised release and a $10,000 fine, according to a release.

Metro was the last of the three defendants to enter a plea. Tamayo, 43, of Brooklyn, New York, formerly a mortgage broker, pleaded guilty in September 2014 to conspiracy to commit securities and tender-offer fraud, securities fraud, and tender-offer fraud. Eydelman, 43, formerly of Colts Neck—who previously worked for Oppenheimer & Co. and Morgan Stanley—pleaded guilty in September to securities and tender-offer fraud, and conspiracy. Neither Tamayo nor Eydelman had been sentenced yet.

Froccaro, of Port Washington, New York, said, “I just hope the government seeks just punishment for Mr. Tamayo and Mr. Eydelman.”

Froccaro added that Metro “received absolutely nothing from this scheme—in fact, he lost money,” though prosecutors alleged that Metro had a claim to $168,000 of the ill-gotten proceeds.

Brian Roe, managing attorney and director of the managing clerk’s office at Simpson Thacher, didn’t respond to a call and email seeking comment.

According to electronic court documents, Eydelman is represented by James Ross Smart of the Southport, Connecticut, office of McElroy, Deutsch, Mulvaney & Carpenter, and Tamayo is represented by A. Ross Pearlson of Chiesa, Shahinian & Giantomasi in West Orange. Neither could be reached by phone.

Contact the reporter at dgialanella@alm.com.