Eugene Plotkin

Eugene Plotkin, formerly a research analyst at Goldman Sachs, was convicted of insider trading, and sentenced on January 4, 2008 to 57 months in jail. [ [http://www.ft.com/cms/s/0/17197652-bb31-11dc-9fbc-0000779fd2ac.html?nclick_check=1 Insider dealing sentence highlights crackdown] , Financial Times, Ben White, January 5 2008, accessed January 6, 2008] He was ordered to pay a $10,000 fine and to forfeit up to $6.7 million, the amount of the scam's illegal profits. Plotkin pleaded guilty to conspiracy to commit securities fraud and eight counts of insider trading.

The scam

Plotkin worked with David Pajcin, a former employee of Goldman Sachs, who has cooperated with the prosecution. The prosecution began after regulators noticed unusually high trading volume before a merger announcement and discovered that Pajcin's aunt had made more than $2 million.

Sonja Anticevic, a 63 year old retired tailor from Omiš, Croatia who was living on a pension of about $263 a month and occasionally worked as a cleaning lady, was at first accused by the U.S. Securities and Exchange Commission of buying $130,000 of Reebok call options in the 2 days before Reebok was taken over by Adidas-Salomon AG. She told the Associated Press that she "never bought a stock and I have no idea how that works." 8,675 Reebok options were traded on those two days, more that 50 times the usual amount. The SEC investigation was prompted by the timing of the unusual volume. [ [http://www.forbes.com/home/feeds/ap/2005/08/08/ap2175419.html Forbes.com. 8/08/05] ] [ [http://slw.issproxy.com/securities_litigation_blo/2005/08/the_formula_sti.html Securities Litigation Watch 8/05/05] ] [The Wall Street Journal, 8/08/05, p. C3, “SEC Wins Court Order in Case Prompted by Reebok Call Trades.”]

As alleged in the complaint, in one scheme, Plotkin and Pajcin persuaded a mergers and acquisitions analyst at Merrill Lynch to provide tips on upcoming mergers in return for a share of the trading profits. In another scheme, Plotkin and Pajcin recruited two individuals to obtain jobs at a printing plant in Wisconsin, steal advance copies of Business Week magazine and tip Plotkin and Pajcin on the names of companies discussed favorably in the “Inside Wall Street” column before the magazine became public. A grand juror allegedly passed illegal tips in another part of the scam.

Plotkin and Pajcin traded on the inside information, initially in an account in Pajcin’s name and later, in accounts in the names of others in Europe and the United States. Plotkin and Pajcin also tipped several individuals in the United States and Europe in return for a share of their trading profits. In total, Plotkin and Pajcin traded in at least 25 stocks within one year based on inside information obtained through these schemes. ['SEC Complaint Charges International Insider Trading Ring, Including Personnel at Goldman Sachs and Merrill Lynch', [http://www.sec.gov/news/press/2006/2006-53.htm] ]

Plotkin pleaded guilty to conspiracy to commit securities fraud and eight counts of insider trading. Most of the profits have been secured by federal authorities who froze bank accounts when the fraud was discovered.

David Pajcin, a former Goldman Sachs Group Inc. analyst has pleaded guilty to charges in the case and is cooperating with the government.

Plotkin introduced Pajcin to his college friend Stanislav Shpigelman in 2004 at a Russian day spa and sauna in lower Manhattan. Shpigelman worked as an analyst at Merrill Lynch & Co.'s mergers-and-acquisitions division. Shpigelman pleaded guilty to conspiracy to commit insider trading and was sentenced last year to more than three years in prison. [The Associated Press, 'Former Goldman Sachs Analyst Sentenced for Insider Trading', [http://www.law.com/jsp/article.jsp?id=1199441119938&rss=newswire] ]

Background

Plotkin is a Russian,who is an immigrant to United States. He attended high school in Sebastopole, California, and then matriculated at the California Institute of Technology, living in Fleming House as a freshman. After receiving a glowing recommendation from Caltech economics professor Scott Page, he transferred to Harvard University at the beginning of his sophomore year, living in Lowell House and concentrating in economics. Plotkin became heavily involved in ballroom dancing, a hobby which he continued as a fixed income analyst for Goldman Sachs in New York City.

References

External links

* [http://www.nytimes.com/2008/01/04/business/04insider.html?_r=1&ref=business&oref=slogin New York Times]
* [http://news.bbc.co.uk/1/hi/business/7171796.stm BBC]
*New York Magazine [http://nymag.com/daily/intel/2008/01/the_dance_ends_for_eugene_plot.html] , White Men with Money, The Dance Ends for Eugene.