RBC Analyst Faces Insider Case Year After Undergrad B-School

(Bloomberg) -- Barely a year after serving as student body president at the NYU Stern School of Business, a junior analyst at RBC Capital Markets was charged by federal prosecutors with insider trading.

Bill Tsai, 23, is accused of trading ahead of the April 15 announcement that private equity firm Siris Capital Group would acquire the digital printing technology company Electronics for Imaging, or EFI. The Securities and Exchange Commission also filed a related civil lawsuit in Manhattan on Monday.

“Tsai learned of the impending acquisition through his work” at the firm, which the government identifies as Investment Bank A. Soon afterward, Tsai stole the “material nonpublic information” by buying options in EFI in a personal account he had concealed from the bank, earning $98,750, the U.S. said.

Sanam Heidary, a spokeswoman for RBC Capital Markets, the investment-banking division of Royal Bank of Canada, said the New York firm had suspended Tsai. Tsai’s LinkedIn page identifies him as an investment banking analyst and says he joined the firm in July 2018.

“RBC has a zero-tolerance approach to any breach of the law or our code of conduct,” Heidary said. “We have cooperated fully with law enforcement as it relates to this matter.”

All-Cash Deal

EFI agreed to be purchased by Siris Capital in an all-cash deal valued at about $1.7 billion, representing about a 26% premium to the April 12 closing price. Siris secured committed debt financing from RBC Capital, KKR Capital, Deutsche Bank, Barclays, Credit Suisse and Macquarie Capital.

Tsai, who lives in New York, used a secret trading account to buy 187 out-of-the-money call options for $28,410 in late March and early April, according to prosecutors. When the EFI deal was announced, shares shot up 29%, they said.

Tsai was arrested Sunday morning and is charged with a single count of securities fraud. In court on Monday, he was released on a $100,000 bond. He faces a prison sentence if convicted. His attorney, Mark Hellerer, declined to comment.

“His profits were not the result of trading acumen, diligent research, or blind luck, but rather, as alleged, the product of theft of confidential information from his employer,” U.S. Attorney Geoffrey Berman in Manhattan said in a statement.

Summer Intern

Tsai joined RBC as an intern in summer 2017, according to the government. He was hired full time beginning in July 2018, after his graduation from Stern’s undergraduate business program. One of his duties was updating and circulating a confidential internal report that tracked client deals, including mergers and acquisitions. He learned of the impending EFI deal from his work on the report, according to the criminal complaint.

Tsai came to New York from his native Taiwan to attend Stern, one of the top programs in the U.S., where he concentrated in finance. He was the student body president of the undergraduate business school in 2018, according to his LinkedIn page.

In a November 2017 interview with the Stern School website, Tsai was asked what advice he would give to first-year students.

“Hold on to your values,” he answered, according to the website. “I think the biggest thing is that you learn so many things in school. That’s a beautiful part of the school, but it’s to figure out what you believe in.”

The criminal case is U.S. v Tsai, 19-cr-7464, U.S. District Court, Southern District of New York (Manhattan). The SEC case is SEC v. Tsai, 19-cv-7501, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporters on this story: Bob Van Voris in federal court in Manhattan at rvanvoris@bloomberg.net;Doug Alexander in Toronto at dalexander3@bloomberg.net

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, David S. Joachim

©2019 Bloomberg L.P.