Feds Charge Morgan Stanley Broker as Member of Insider Trading Ring
A Morgan Stanley broker in Morristown, NJ, was among the seven people charged on Wednesday with alleged insider trading that netted them around $5 million in illicit profits.
The U.S. Attorney in the Southern District of New York unveiled an indictment charging Michael H. Siva with 20 counts of fraud and conspiracy for insider trades allegedly made between January 2015 and April 2017.
Siva, who has worked for all but 17 months of his 22-year career at Morgan Stanley’s Morristown, NJ, office, allegedly made $8,000 in illegal trading profits for himself and some $880,000 for his clients, according to the federal indictment.
He received tips about potential mergers from a client, James H. Moodhe, who learned of the deals from his daughter’s boyfriend, an information technology employee at Bank of America’s capital markets unit, the U.S. attorney said.
Moodhe, 60, a former treasurer at interdealer broker Tullett Prebon, allegedly made more than $2 million for himself trading stocks and options based on the tips through Morgan Stanley and other firms. He passed tips to Siva, 55, at “various diners outside of New York City,” according to the indictment.
Siva allegedly attempted to cover up the tips by sending research to Moodhe to justify the trading.
Siva was released on bail on Wednesday, according to court records. He could not be reached for comment, and has been placed on leave by Morgan Stanley.
“The alleged conduct is a gross violation of our internal policies and our company’s values,” a spokeswoman at Morgan Stanley wrote in an e-mailed statement. The firm, which was not identified in the complaint, is cooperating with law enforcement officials, she said.
In a separate civil complaint filed by the Securities and Exchange Commission on Wednesday against Siva and six others, the regulator noted that his discretionary tip-inspired tips “earned commissions for himself and the Brokerage Firm.”
Neither the SEC complaint nor the criminal indictment name Morgan Stanley.
In addition to placing trades for clients, Siva passed tips to a longtime client who made more than $300,000 from trading out-of-the-money call options, according to the SEC complaint, which did not name the client. The SEC is seeking disgorgement and civil penalties.
Moodhe and Daniel Rivas, the tipster who worked at the bank, pled guilty to securities fraud in Manhattan federal court last week, prosecutors said on Wednesday. The U.S. attorney’s office said they have cooperated in the investigations.
Siva’s BrokerCheck record indicates that he first registered as a broker with Schroder in March 1995 before joining Morgan Stanley in August 1996.
Last September, former Morgan Stanley and Oppenheimer broker Vladimir Eydelman was sentenced to 36 months in prison for trading on inside tips he received on more than a dozen corporate mergers.