Mortgage broker pleads guilty in insider trading case

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A mortgage broker has pleaded guilty for his participation in an insider trading case. And the lengths he went to destroy evidence are quite creative.

Frank Tamayo, a New York-based mortgage broker, has been named as the middle man in a scheme where non-public information about pending mergers and acquisitions was passed along from the lawyer of an international law firm to his stock broker.

“Tamayo passed the information to Eydelman (his stock broker) by showing him a post-it note or napkin on which Tamayo wrote the stock ticker symbol of the company to be acquired,” court documents state. “Tamayo then chewed up, and sometimes ate, the post-it note or napkin to destroy evidence of the tip.”


Along with Tamayo and Eydelman, Steven Metro of Simpson Thacher & Bartlett LLP – the source of the inside information – was also named in the case.

“Following this clandestine exchange, Eydelman returned to his office, typically gathered research relating to the target company, and emailed Tamayo the research and/or Eydelman’s supposed thoughts as to why buying the stock made sense, with the intent to create a paper trail of false and contrived emails that purportedly served as non-fraudulent bases for the illegal trading by Tamayo and Eydelman,” the court document states.

The scheme occurred over the course of three and a half years and fetched over $5.6 million in illegal profits for the three accused and their respective families, friends and Eydelman’s customers.

As for the hungry mortgage broker?

“Tamayo, trading through his own accounts and accounts in the names of his girlfriend and sister, traded an advance of 12 of the 13 deal announcements, yielding profits of approximately $1,056,970,” the document reads.
  • Terry Lynch on 2014-09-24 12:40:53 PM

    Was this guy a Mortgage Broker or a Stock Broker? Otherwise the story makes no sense

  • Max Cafissi on 2014-09-24 1:54:18 PM

    Why is this newsworthy ? It happens regularly in the Stock Brokerage industry. It's all about "Insider Trading". And don't think it doesn't happen in Canada. The big 5 Banks have owned an Investment arm for over 25 years so don't think they haven't been part of this scam.

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