Swiss Trader Emerges in U.S. Insider Trial After Secret Plea
Mysterious Swiss Trader Emerges as Witness in Insider Trial
(Bloomberg) -- A mysterious Swiss trader tied to an international insider-trading network told New York jurors he made about $70 million from illegal tips from sources on three continents and that he sometimes shared the information with others -- for a price.
Marc Demane Debih, who already has pleaded guilty to dozens of insider-trading charges, testified Wednesday as the key government witness against Telemaque Lavidas, the first U.S. defendant to be tried for alleged involvement in a broad conspiracy the government has been probing since 2013.
Lavidas is charged with telling a friend, Georgios Nikas, about market-moving information he got from his CEO father. Nikas and Demane Debih were at the center of a network that used tips from insiders and bankers to make tens of millions in illegal profits, U.S. authorities allege. On Tuesday, former Goldman Sachs Group Inc. investment banker Bryan Cohen pleaded guilty to passing along confidential information used by the ring to make trades.
“I was using information, secret information, non-public information that I was getting from sources -- investment bankers, people working at companies” -- to make illegal trades, Demane Debih testified.
The Swiss trader, who is cooperating with the U.S. in hopes of leniency when he’s sentenced, testified that most of his sources were investment bankers, including Cohen, who often passed information about impending corporate acquisitions. He said he communicated with contacts using burner cell phones purchased with cash in London, Greece and Switzerland.
Stock Tips
Demane Debih, 49, told jurors that one of the stocks he and Nikas traded was Ariad Pharmaceuticals Inc., a Boston-based maker of cancer drugs. Lavidas’s father, Athanase Lavidas, is a former Ariad board member and the chief executive officer of a Greek pharmaceutical company, Lavipharm SA. The elder Lavidas hasn’t been charged.
Nikas, a Greek businessman who owns restaurants in New York, “told me he was getting the information from a friend and his father,” Demane Debih said in testimony that began Tuesday. Asked by Assistant U.S. Attorney Daniel Tracer to name the source, Demane Debih said, “Telemaque Lavidas and his father.”
When asked how Nikas got the information, Demane Debih said the restaurant owner “was very close” with Lavidas. “He was on the phone with him and they were meeting very frequently in New York” at Nikas’s home and restaurant, he said.
On Wednesday, Demane Debih told jurors that a Turkish-Swiss contact in Geneva passed along a rumor in 2013 that Ariad was going to be acquired and taken private. He testified that he ran the scenario by Nikas, because he knew Nikas had access to information from an Ariad board member through Lavidas. Nikas told him there was nothing to the rumor, advising him to sell his long position in Ariad.
Demane Debih, who has been held in a U.S. jail since May, said he “strongly advised” his Geneva contact to sell his position. “I told him I had a very good source,” the trader said. “It was not the time to be long on the stock. It was time to be short on the stock. He was very happy. I saved him a huge loss on this position.”
Link to Network
Lavidas, who has been held in jail since his arrest in October, claims Nikas actually got his tips from a fugitive former Centerview Partners investment banker, Darina Windsor.
Nikas, who faces insider-trading charges, is in Greece and considered a fugitive by the U.S. He owns a luxury apartment and restaurants in New York. Windsor has also been charged. Prosecutors believe she is in her native Thailand.
The U.S. claims Lavidas passed the tips to Nikas to benefit his friend and in exchange for favors, including a $500,000 investment from Nikas’s wife in his nutrition-bar company, Mediterra Inc.
Forfeit $49 Million
Demane Debih, who pleaded guilty to 38 criminal counts, told jurors he was arrested in Belgrade, Serbia, where he was held for six months until his extradition to the U.S. in May to face insider-trading charges. Prosecutors took care to shield Demane Debih’s identity and he pleaded guilty in a closed-door hearing on Oct. 3, agreeing to forfeit $49 million in profits and cooperate with the U.S. probe.
Since 2013, American prosecutors, working with other countries, have investigated an alleged web of insider-trading that includes residents of the U.S., U.K., France, Switzerland, Israel, Cyprus, Greece and Hong Kong. The participants allegedly used secret information to profit from mergers, regulatory moves and other market-moving actions involving pharmaceutical companies.
The investigation became public in October, when prosecutors in New York announced charges against six people, including Lavidas, Nikas, Cohen and Windsor.
The case is U.S. v. Lavidas, 19-cr-716, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Bob Van Voris in federal court in Manhattan at rvanvoris@bloomberg.net
To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Steve Stroth
©2020 Bloomberg L.P.