Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today that WALTER C. LITTLE, a/k/a “Chet,” a former partner at an international law firm (the “Firm”), and ANDREW BERKE, a business associate of LITTLE, were arrested this morning and charged with insider trading. LITTLE and BERKE collectively made approximately $1 million in profits in connection with options and stock trading based on material nonpublic information that LITTLE improperly accessed from the Firm’s databases and then provided to BERKE. LITTLE and BERKE were arrested today and presented before a Magistrate Judge in the Middle District of Florida.
Acting Manhattan U.S. Attorney Joon H. Kim said: “Walter Little, a former partner at a major international law firm, allegedly used confidential information – entrusted to the firm by its clients – to illegally trade for personal gain. Although he billed no work for these clients, Little allegedly used his position at the firm to access and share their nonpublic business information. As alleged, Little and Andrew Berke then used that inside information to make approximately $1 million in illegal profits. We continue the fight against illegal insider trading, and are committed, along with our partners at the FBI and the SEC, in ensuring fairness and integrity in our financial markets.”
FBI Assistant Director William F. Sweeney Jr. said: “Little and Berke allegedly used Little’s position at the firm to access material, nonpublic information and engage in insider trading – a scheme that ultimately resulted in collective profits of approximately $1 million. Having access to this type of information is a privilege, one that is extended in furtherance of trusted business-related matters. When clients’ proprietary information is used in this way, they’re not the only ones at risk of losing; keeping our markets fair for all investors remains a top priority for the FBI. We will continue to work with our law enforcement partners to bring charges against those who use illegal and unfair advantages in our securities markets.”
According to the Complaint unsealed today in Manhattan federal court:[1]
Between February 2015 and May 2016, LITTLE was employed at the Firm as a partner. During that time, the Firm provided transactional and regulatory legal advice to a wide variety of corporations, among other services. Clients regularly entrusted the Firm with nonpublic information and the Firm consequently enacted policies requiring its employees to keep such information confidential. LITTLE, however, failed to abide by these policies. Even though he did not perform any billable work for the associated clients, LITTLE accessed documents relating to seven different companies containing material nonpublic information about (1) a client’s anticipated delisting from the NASDAQ stock exchange; (2) multiple clients’ involvement in mergers and acquisitions; (3) multiple clients’ anticipated earnings announcements; and (4) a securities offering being planned by a client. LITTLE then purchased and sold stock and options based on the information contained in these documents, making profits of over approximately $320,000.
In addition to trading on the information himself, LITTLE also provided the information to BERKE, his business associate and friend. BERKE also traded on the information, making profits of over approximately $660,000. For example, on or about July 23, 2015, LITTLE accessed a document on the Firm’s document management system entitled “Revised Merger Agreement,” which contained material nonpublic information about an upcoming merger of a Firm client. The following morning, between approximately 8:31 a.m. and 8:34 a.m., LITTLE and BERKE exchanged approximately six text messages. Approximately an hour later, at 9:41 a.m., BERKE purchased hundreds of shares of stock in the relevant company. The merger referenced in the document that LITTLE had accessed became public approximately three days later, resulting in significant profits for BERKE.
LITTLE, 43, of Tampa, Florida, and BERKE, 49, of Apollo Beach, Florida, are each charged with one count of conspiring to commit securities fraud and six counts of securities fraud. LITTLE is also charged with an additional five counts of securities fraud. The charge of conspiring to commit securities fraud carries a maximum sentence of five years in prison, and each securities fraud count carries a maximum sentence of 20 years in prison. The charges also carry a maximum fine of $5 million, or twice the gross gain or loss from the offense. The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants would be determined by the judge.
Mr. Kim praised the investigative work of the FBI and thanked the SEC, which has filed civil charges in a separate action. He added that the FBI’s investigation is ongoing.
The allegations contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth below constitute only allegations, and every fact described should be treated as an allegation.
