3 Charged in $3.8-Million Insider Trading Scheme

A former Smith Barney broker, a former lawyer from a prestigious corporate law firm and the broker’s sister have been charged with participating in a $3.8-million insider trading scheme, federal prosecutors said.

Eben Smith, 41, of Greenwich, Conn., a former broker in the Stamford, Conn., office of Smith Barney, Harris Upham & Co., was indicted by a federal grand jury on 10 counts relating to insider trading.

Steven Glauberman, 39, of Manhattan, a former associate of the Skadden, Arps, Slate, Meagher & Flom law firm, was named in a 10-count criminal information filed by the U.S. Attorney’s Office.

The filing of a criminal information means that a defendant has waived the right to an indictment and often indicates that a plea agreement is being negotiated.

If convicted, both men face a maximum sentence of five years in prison. They also face a $250,000 fine on each count--or a fine amounting to twice the gross profits made through the alleged scheme.

Separately, the Securities and Exchange Commission in Washington announced that Glauberman settled related civil insider trading charges without admitting or denying guilt.

His sister, Lori Glauberman, a former junior associate in the fixed-income department at Bear, Stearns & Co., also settled civil insider charges involving trading in her own account on inside tips.

As part of the settlement, Steven Glauberman will repay $221,000 and his sister $19,000 in illegal profit.

Prosecutors allege that Steven Glauberman, who worked in the merger and acquisitions area, sold information to Smith about his law firm’s clients who were involved in takeover situations.