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The husband of a New York Linklaters associate was arrested Wednesday in Boston on federal insider trading charges in a case that alleges he profited from knowledge garnered through his wife’s M&A work.

Fei Yan, 31, is accused of making more than $120,000 on illegal trades in the stock of two companies poised for corporate transactions that his wife helped to handle while at Linklaters.



Those deals, according to a separate civil lawsuit filed against Yan by the U.S. Securities and Exchange Commission in Manhattan federal court, included Stillwater Mining Co.’s Dec. 9, 2016, acquisition by South Africa’s Sibanye Gold Ltd. for $2.2 billion, in which Linklaters represented Sibanye, and Linklaters client Steinhoff International Holdings’ $3.8 billion purchase of Mattress Firm Holding Corp. in September.

Yan, a citizen of China who worked as a research scientist at Massachusetts Institute of Technology, was married to a law firm associate who worked on the deal, the indictment says. Reuters first reported that the associate, who is not named, worked at Linklaters. The associate is not named as a defendant by the SEC or federal prosecutors.

In a statement, a Linklaters spokesman said the associate had been suspended pending further investigation and was without access to the firm’s systems and confidential information.

“The duty to respect the confidential nature of our work is the bedrock of our business, our client relationships and the legal profession,” the statement said. “We have robust policies in place, including those relating to the handling of confidential information and dealing rules, on which we train all our lawyers and staff. We will continue to cooperate fully with the authorities on this matter.”

Linklaters is far from the first firm to be caught up in claims of insider trading among or abetted by its lawyers.

In May, Walter “Chet” Little was charged with insider trading related to work he did as a partner with Foley & Lardner. At the time of his arrest, he was a partner at Bradley Arant Boult Cummings.

And in March, Robert Schulman, an Arent Fox patent prosecution and intellectual property litigation partner in Washington, D.C., was convicted of insider trading for passing on a tip related to a billion-dollar pharmaceutical merger announced in 2010.

Of course, insider trading isn’t the only concern for law firms when it comes to keeping M&A deals private. In December, three Chinese citizens were charged for making more than $4 million after trading on secrets they pilfered by hacking large law firms.

In the Yan case, the indictment alleges the MIT employee opened a brokerage account in his mother’s name to make trades related to the corporate deals his wife helped to prepare.

On Dec. 8, the day before the Stillwater merger, the indictment alleges Yan bought 54 call options that would have allowed him to purchase the company’s shares at $15 on Jan. 20. The next day, after the sale was announced, he sold the options for $109,420.

The day before, FBI investigators say Yan researched insider trading on his computer, including reading a news article with the title, “Want to Commit Insider Trading? Here’s How Not to Do it.”


Roy Strom, based in Chicago, covers the business of law with a focus on how law firm business models are changing. He can be reached at rstrom@alm.com. On Twitter: @RoyWStrom


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