Steven Metro, a former managing clerk at Simpson Thacher & Bartlett, was sentenced Wednesday to 37 months in prison for his role in an insider trading scheme based on information he stole from the firm.
The decision came three months after an appeals court vacated a stiffer prison term.
U.S. District Judge Michael A. Shipp of the District of New Jersey had originally ordered Metro, 44, to spend 46 months in prison, but the U.S. Court of Appeals for the Third Circuit in February said that sentence improperly punished him for the actions of his co-conspirators.
Metro reappeared in front of Shipp on Wednesday, receiving the shorter prison term along with three years of supervised release, according to U.S. Attorney Craig Carpenito.
Authorities had initially said that the scheme netted Metro and two others a total of $5.6 million, but on Wednesday they said that Metro’s new sentence was based on $2 million in illicit gains directly attributable to him.
Authorities said that from 2009 to 2014, Metro accessed information from Simpson Thacher’s computers to identify clients that were about to participate in a merger or acquisition, sometimes searching using terms such as “merger agreement.”
He then gave that information to his friend Frank Tamayo, who relayed it to his stockbroker, Vladimir Eydelman, generally at meetings in New York’s Grand Central Station. Tamayo would hand Eydelman a napkin or Post-it marked with the stock symbol, when to buy and what price to pay. Eydelman would then commit the information to memory and Tamayo would chew up and swallow the note to destroy the evidence, federal prosecutors said.
Metro claimed that he was not aware that Eydelman was involved until one year after he relayed his last tip to Tamayo, who in mid-2015 cut a deal with the U.S. Securities and Exchange Commission.
This purported ignorance was at the heart of the appeal that he lodged with the Third Circuit. Metro argued that he was wrongly sentenced based on the entire $5.6 million in profits generated by the scheme, saying that he should not be held responsible for improper trades of which he was not aware.
The panel agreed, concluding that federal prosecutors failed to demonstrate that Metro acted in concert with or provided inside information to Eydelman.
The appeals court added that the case differed from the 2013 United States v. Kluger insider trading case, which involved Matthew Kluger, a former associate at Cravath, Swaine & Moore; Fried, Frank, Harris, Shriver & Jacobson; Skadden, Arps, Slate, Meagher & Flom; and Wilson Sonsini Goodrich & Rosati. In that case, Kluger admitted that he was providing inside information to a middleman with the intent that it would ultimately go to a stockbroker.
According to court documents, Metro himself earned approximately $168,000 from the scheme, based on Tamayo reinvesting a $7,000 profit from the initial illicit trade into future ones.
In March, Metro also received a $25,000 civil penalty in an enforcement proceeding brought by the SEC over the scheme.
His attorney, Lawrence Lustberg of Gibbons P.C., did not immediately respond to a request for comment.