The recent indictment of four brokers and a floor clerk by federal prosecutors and the
After those big blocks of institutional trades are executed, an Aug. 23 Wall Street Journal report indicates, the profiteers promptly sell off the share for a tidy sum, and the final victims are everyday mutual fund investors and pension beneficiaries whose money is overseen by the Street's largest trading customers.
In the squawk-box case, where former
"It makes me sick," said Andrew Brooks, head of stock trading at
Similar cases are expected, as the SEC is investigating a number of Wall Street firms over whether they have sufficiently protected their investors' interests. But as the Wall Street Journal reveals through court documents, few people were more adept at taking advantage of leaked information than Amore.
Amore, whose 20-year financial services career crisscrossed the country and included an eponymous hedge fund that's now defunct, first began using insider information while working as day trader at the former Andover Brokerage in 2001. One trade executed ahead of a big order netted Amore $8,562, the WSJ report indicates.
Amore's tenure at Watley began in early 2002. He promised to revive the flagging company and did so, the WSJ reports, by paying struggling, post-tech bubble brokers at
The trading room at Watley would often fall silent, court documents obtained by the WSJ allege, as Amore and his colleague strained to hear big orders through the crackle. On Oct. 16, 2002, for example, Watley traders made $8,700 over the course of just 12 minutes by shorting shares of Citigroup stock after overhearing Merrill's plans to sell a big chunk. In another deal, the eavesdropping brought a $19,000 windfall over 120 seconds.
The elaborate scheme fell apart in mid-2003, when Watley executive became suspicious and ultimately fired Amore, the WSJ reveals. He is cooperating with investigators in return for leniency. Lehman, Citigroup and Merrill are also cooperating with the probe.
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The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.