Last of Yuppie 5 Pleads Guilty of Insider Trading
The last of the so-called Yuppie Five accused of insider trading pleaded guilty Wednesday to four criminal charges, including one count each of conspiracy, securities fraud, mail fraud and obstruction of justice.
Michael N. David, 28, a former associate with the New York law firm of Paul, Weiss, Rifkind, Wharton & Garrison, faces a maximum sentence of 20 years in prison and a $1-million fine. U.S. District Judge John F. Keenan scheduled sentencing for March 4.
The four other defendants in the scheme, including three employees of Wall Street investment or brokerage firms and a young investor living in Rhode Island, pleaded guilty to related charges on June 5.
Prosecutors charged that the group, all in their 20s, profited on stock trades prompted by illegal insider information provided by David, who learned of possible takeovers at his law firm.
One of those defendants, Andrew Solomon, 27, was sentenced Wednesday by U.S. District Judge Gerard L. Goettel to a fine of $10,000, a year’s probation and 250 hours of community service.
Unrelated to Boesky Case
The cases are unrelated to the much bigger Dennis B. Levine-Ivan F. Boesky insider trading case, which has resulted in record penalties and an extensive SEC investigation on Wall Street.
Federal prosecutors agreed to drop 12 other counts against David in return for his guilty plea.
David’s attorney, Darrell Fennell, said his client has “offered a substantial payment . . . to the Securities and Exchange Commission to be paid over a 10-year period” in settlement of SEC civil charges in the case. Commission officials could not be reached Wednesday for comment.
Authorities had charged that beginning in September, 1985, David advised Solomon, then an analyst at the small New York brokerage firm of Marcus Schloss & Co., to purchase Union Carbide stock on confidential information that GAF Corp. was planning a takeover bid for the company. David’s employer was representing GAF.
David acknowledged in court to also tipping his associates to confidential information about possible takeovers of Avondale Mills and American Brands.
He was dismissed from the law firm in March.
Also awaiting sentencing in the case are Morton Shapiro, formerly at the brokerage of Moseley, Hallgarten, Estabrook & Weeden; Robert Salsbury, a former analyst at the investment firm of Drexel Burnham Lambert, and Daniel Silverman, a friend and customer of Shapiro’s.
