Customers of N.Y. Brokerage Target of Insider Probe
The U.S. Attorney in Manhattan is conducting a criminal investigation of possible illegal insider stock trading by customers of a discount brokerage firm here that caters to Wall Street executives, sources disclosed Tuesday.
The firm, Andrew Peck Associates Inc., has provided numerous documents pertaining to customer accounts to the U.S. Attorney’s office, according to Andrew F. Peck, the brokerage’s chairman.
In a brief telephone interview Tuesday, Peck emphasized that the government’s investigation did not concern the brokerage’s operations or officers but was focused on customers who traded through personal accounts at the firm.
“As far as I know, it has nothing to do with the firm itself,” Peck said. He added that none of the accounts involved were controlled by the brokerage firm or any of its officers. Peck estimated that trading in fewer than a dozen accounts was being examined by the U.S. Attorney.
It could not be determined Tuesday what customers were targets of the probe. Wall Street sources familiar with grand jury subpoenas issued as part of this investigation said it appears to focus on trading in stocks of takeover targets by investment firm executives. They said the Andrew Peck brokerage is popular with some sophisticated Wall Street lawyers and traders because of its location and low commission charges.
Takeover target stocks are attractive for savvy traders because they often shoot up in price after bids are announced. This investigation is part of a series of criminal probes that focus on trading in these stocks before the announcement of bids. It is illegal in many cases to buy takeover target stocks on the basis of confidential information about an upcoming bid.
The Manhattan U.S. Attorney is conducting two extensive criminal investigations of alleged insider trading and other violations at major Wall Street firms. One probe concerns allegations of insider stock trading by executives at Goldman, Sachs & Co. and Kidder, Peabody & Co., while the other investigation is focusing on alleged wrongdoing involving Drexel Burnham Lambert Inc.
