Yale Lawyer, Former Biglaw Attorneys Arrested in Sweeping M&A Insider Trading Crackdown

Federal prosecutors have charged thirty people, including corporate lawyers from several of the nation’s most prestigious law firms, in connection with a decade-long insider trading scheme that generated tens of millions of dollars in illicit profits by exploiting confidential merger and acquisition information. The charges, unsealed on Wednesday in federal court in Boston, represent one of the largest insider trading investigations involving attorneys in recent history.

The United States Attorney for the District of Massachusetts, Leah B. Foley, announced the charges alongside the Federal Bureau of Investigation and the Securities and Exchange Commission. In a statement, Foley said, “The trading on unannounced financial news alleged here not only violated the securities laws, but it also took advantage of the special access and ethical duties that come with a law license.” She added that the charges are part of ongoing efforts to ensure a level playing field for all investors.

At the center of the alleged conspiracy is Nicolo Nourafchan, a 43-year-old Los Angeles resident and 2011 Yale Law School graduate who worked at several elite firms between 2013 and 2023, including Sidley Austin, Latham & Watkins, Cleary Gottlieb, and Goodwin Procter. Prosecutors allege that Nourafchan and his co-conspirator, New York attorney Robert Yadgarov, 45, recruited other lawyers and corporate insiders to leak confidential information about pending mergers in exchange for cash kickbacks.

According to court documents, Nourafchan used his positions at these firms to access internal computer networks and view confidential documents on nearly thirty major M&A transactions, some of which involved some of the largest deals of the past decade, including Occidental Petroleum’s acquisition of Anadarko Petroleum and Johnson and Johnson’s purchase of Actelion Ltd. The indictment details how Nourafchan and Yadgarov then provided this non-public information to a network of traders and middlemen who placed trades ahead of public announcements, splitting the illegal profits.

The FBI confirmed that nineteen defendants were arrested on Wednesday and will appear in federal courts in Los Angeles, Fort Lauderdale, and New York. Two additional defendants remain fugitives, located in Russia and Israel. The special agent in charge of the FBI’s Boston division, Ted E. Docks, stated, “With today’s arrests, the FBI has dismantled a large-scale, decade-long, international organized criminal network of corporate attorneys and financial professionals.” Docks added that anyone who engages in insider trading fundamentally undermines the trust necessary for financial markets to function.

Authorities say the conspirators went to great lengths to conceal their activities, using burner phones, encrypted messaging applications, coded language, and in-person meetings where electronic devices were turned off. Kickback payments, sometimes amounting to hundreds of thousands of dollars per transaction, were allegedly funneled through intermediaries and shell companies registered in offshore jurisdictions such as Panama and Switzerland, often disguised as loans or legitimate business transactions.

One of the highest-profile transactions mentioned in the indictment involves Amazon’s proposed acquisition of iRobot in 2022, a deal that later collapsed due to antitrust concerns. According to prosecutors, Nourafchan at the time was employed by Goodwin Procter, which advised iRobot. While on a “leave of absence” from the firm, he allegedly viewed confidential materials about the deal on the firm’s document management system without authorization. A co-defendant, Simon Fensterszaub of Fort Lauderdale, then allegedly traded on that information.

Several prominent law firms confirmed that former employees were implicated. A spokesperson for Latham and Watkins said, “The former associate charged today has not been associated with our firm for five years, and the conduct as alleged would reflect a serious violation of our robust policies and procedures.” Goodwin Procter said it was “deeply disappointed that a former employee is alleged to have violated the trust placed in him and misused confidential information as part of a broader criminal scheme affecting multiple law firms and their clients.” Wachtell, Lipton, Rosen and Katz also confirmed that a former lawyer was involved and said the firm has cooperated fully with investigators.

The investigation had been underway for years and had already produced nine guilty pleas from cooperating witnesses before Wednesday’s public announcement. Among those who secretly pleaded guilty is Gabriel Gershowitz, an attorney who had worked at Weil, Gotshal and Manges, DLA Piper, and Willkie Farr and Gallagher. According to authorities, Gershowitz, who attended college with Nourafchan and Yadgarov, supplied confidential merger information beginning in 2019.

The charges include securities fraud, conspiracy to commit securities fraud, and money laundering conspiracy, each carrying potential prison sentences of decades. The SEC has simultaneously filed a parallel civil enforcement action against twenty-one defendants, seeking injunctive relief, disgorgement of profits, and civil penalties.

Legal ethics experts say the case has sent shockwaves through the legal industry and may prompt law firms to significantly tighten internal security, monitor employee access to sensitive documents more aggressively, and restrict remote access to confidential deal information. The investigation remains ongoing, and federal authorities have indicated that additional charges and arrests could follow.