Mystery Swiss Trader May Link Insider Groups on Two Continents
Mystery Swiss Trader May Link Insider Groups on Two Continents
(Bloomberg) -- A mysterious Swiss trader may provide a link between U.S. insider-trading indictments unsealed last month and seemingly unrelated investigations in the U.K. and France.
While the cases in New York targeted a Goldman Sachs Group Inc. banker, a Greek restaurateur and a poker-playing securities trader, among others, several indictments mention an unnamed Swiss trader. They use different code names, and it’s not clear whether the references are to the same individual, but the trader is described in similar terms.
A Geneva-based trader named Marc Demane-Debih was arrested last year in Serbia on a U.S. warrant for alleged securities fraud and extradited to New York in May, a spokeswoman for a Belgrade court said. His name doesn’t appear in any of the indictments, and he hasn’t turned up in any public court records or prison rosters, indicating he may be cooperating with authorities. A spokesman for the U.S. attorney’s office in New York declined to comment on the extradition request or the identity of the unnamed Swiss trader in the indictments. Attempts to reach Demane-Debih were unsuccessful.
But interviews with people familiar with Demane-Debih’s activities connect him to the U.S. cases and to some people in an alleged insider-trading network in France. At least one person charged in France was in contact with Walid Choucair, found guilty of trading on inside information in London in June. Choucair, in turn, is one of several London traders who move in the same social circles as Joseph El-Khouri, the poker-playing trader indicted in New York, according to people with knowledge of the matter.
‘Network of Insiders’
The indictments provide clues to the operations of a loose network of traders on two continents who cultivated ties to bankers, allegedly made bets based on information gleaned from them and shared tips in face-to-face meetings or over encrypted social media apps such as Signal or WhatsApp. Members often supplied information to journalists hoping to get quick stock pops. The groups are based on location or affinity. Many of the European traders hang out together in clubs in London’s posh Mayfair neighborhood or party on yachts docked in Monaco in the summer, according to some of them.
“This type of insider network, which we all suspect must exist, is extremely difficult to uncover,” said Jean-Philippe Pons-Henry, a Paris lawyer who used to work for France’s securities regulator. “You need criminal authorities for stuff like wiretaps and financial watchdogs with their powerful tools to analyze transactions. You need to combine such expertise, in several jurisdictions, to get to the bottom of a network of insiders.”
Demane-Debih is connected to at least two other Geneva-based traders suspected of insider trading. Court documents in the U.K. link him to Lucien Selce, and he has ties to Alexis Kuperfis, according to a person familiar with the matter. Selce and Kuperfis are among seven people charged in France for allegedly trading on inside information about the 2015 takeover of U.S. chemical producer Airgas Inc. by France’s Air Liquide SA. The men have challenged the charges, and no trial has been ordered. Lawyers for both declined to comment.
In addition to being acquaintances with Selce and Kuperfis, Demane-Debih also knows London-based trader Eaitisham “Shami” Ahmed, according to documents in a U.K. court case. Ahmed was fined for insider trading in France last year in a civil case unrelated to the Airgas investigation. Efforts to reach him were unsuccessful.
Buffers, Leaks
The mode of operation of the unidentified Swiss traders described in the U.S. indictments is analogous to that recounted in hearings or documents in cases in France and the U.K.: Find someone working on secret deals, create a buffer, trade using highly leveraged derivatives and sometimes leak information to journalists to move the share price.
Bloomberg News reporters regularly receive tips from people active in the market and were first to report on some deals mentioned in this article. The news organization’s policy is not to publish any information without confirming with people who have direct knowledge of the matter. The policy also prohibits telling sources when a story will be published.
Both U.S. and U.K. investigators have been looking at suspicious profits made by members of the network since 2013 or earlier, and the French case goes back at least as far as 2012. But with so many actors involved in corporate deals and major announcements, it’s never easy to identify the source of the leaks.
Now, American investigators say they’ve found a leaky pipe. Darina Windsor, a former banker at Centerview Partners LLC in London, allegedly sent confidential information by email in 2013 about Onyx Pharmaceuticals Inc. to Benjamin Taylor, who worked at Moelis & Co. and was her boyfriend at the time. Taylor then shared the information, via middlemen, with traders who bought shares, options or other derivatives linked to the company, according to one of the U.S. indictments. Taylor also sent documents regarding a potential takeover of Life Technologies Corp. to an intermediary, who provided them to an unnamed Swiss trader, prosecutors said.
The unnamed Swiss trader made $1.5 million betting on the Life Technologies tip, which he shared with a reporter in Canada, according to a separate U.S. Securities and Exchange Commission complaint against Taylor, Windsor and El-Khouri. Taylor, who is believed by prosecutors to be in France, was arrested in Monaco earlier this year, but a court there rejected an extradition request from the U.S. and released him because some documents were filed only in English. Windsor is said by prosecutors to be in Thailand.
Onyx Trades
Demane-Debih traded in shares of Onyx around the same time, according to two people familiar with his activities. He also traded in Ariad Pharmaceuticals Inc., another company that figures in the U.S. indictments, the people said. Prosecutors say Telemaque Lavidas, whose father was on Ariad’s board, picked up tips about the company having to halt clinical trials and passed them to Georgios Nikas, who owns a chain of fast-food Greek restaurants in New York. Both men were indicted last month along with Goldman banker Bryan Cohen, who allegedly passed other confidential information to Nikas.
Lavidas, who was arrested in New York, claimed his role in the conspiracy was “relatively small.” Cohen, who has pleaded not guilty, is under house arrest, and Nikas is in Greece, prosecutors say.
Prosecutors accused El-Khouri of trading on inside information obtained from London bankers Taylor and Windsor, who called each other “Pops” and “Popsy,” through an an unnamed friend and sent gifts back in return.
El-Khouri, denied bail in the U.K. as he fights extradition to the U.S., allegedly swapped tips on a social media group that at least one member would share with a group frequented by Choucair, the London trader convicted of trading on nonpublic information obtained from a friend at UBS Group AG. El-Khouri also communicated with a trading group in Dubai, according to two people who have interacted with him. A lawyer for El-Khouri declined to comment. Choucair’s lawyer said his client wasn’t on any social media group with El-Khouri and is appealing the conviction.
Much like the traders they are investigating, prosecutors on both sides of the Atlantic appear to be sharing tips. U.S. authorities issued a subpoena in 2014 at France’s request to get information about the Gmail account of one of the Geneva-based traders. French investigators shared tapes of another wiretap with British counterparts, and one of the conversations was discussed at Choucair’s trial.
Authorities haven’t finished. At least one other person has been called in for questioning in the U.K. regarding insider trading since Choucair’s conviction, two people said.
Meanwhile, as he fights extradition efforts, El-Khouri remains in London’s Wandsworth prison, a location he now shares with Choucair.
--With assistance from Gordana Filipovic and Chris Dolmetsch.
To contact the reporters on this story: Gaspard Sebag in Paris at gsebag@bloomberg.net;Franz Wild in London at fwild@bloomberg.net;Alan Katz in Paris at akatz5@bloomberg.net
To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Robert Friedman
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