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Former Hedge Fund Manager, Investment Banker, and Two Others Charged with Insider Trading
LEV
L. DASSIN, the Acting United States Attorney for the Southern District
of New York, and JOSEPH M. DEMAREST, JR., the Assistant Director-in-Charge
of the New York Field Office of the Federal Bureau of Investigation
("FBI"),
announced today that JOSEPH CONTORINIS, MICHAEL KOULOUROUDIS, and GEORGE
PAPARRIZOS were arrested this morning on charges of conspiracy and securities
fraud. NICOS ACHILLEA STEPHANOU was previously arrested on related securities
fraud charges. According to the criminal Complaints unsealed in Manhattan
federal court earlier today:
STEPHANOU’s employer, an international investment bank with offices
in New York City and London, provided advice regarding the acquisitions
of Albertson’s Corporation ("Albertson’s") as well
as ElkCorp Corporation ("ElkCorp"). From at least 2005 through
about December 2006, STEPHANOU, who worked on both deals, stole material
nonpublic information from his employer regarding the deals and provided
that information to individuals—including his friends and other
associates—who purchased stock in Albertson’s and ElkCorp
using multiple brokerage accounts. As a result of their trading, those
individuals ultimately reaped profits exceeding $7 million.
Each
of CONTORINIS, KOULOUROUDIS, and PAPARRIZOS, at various times between
September 2005 and December 2006, obtained material nonpublic information
about the acquisition of Albertson's and/or ElkCorp from an investment
banker who worked on both deals. As a result, CONTORINIS, the portfolio
manager of a hedge fund at an investment advisory firm, caused his hedge
fund to purchase approximately 2.5 million shares of Albertson’s
stock, ultimately leading to profits of approximately $7 million. KOULOUROUDIS
traded in the securities of Albertson’s and ElkCorp in multiple
brokerage accounts, reaping profits of approximately $270,000. Based on
the material nonpublic information, PAPARRIZOS traded in the securities
of Albertson’s and ElkCorp, generating profits of several thousand
dollars.
On December 27, 2008, STEPHANOU was arrested at Newark Liberty International
Airport on a three-count Complaint unsealed today in Manhattan federal
court. On December 30, 2008, STEPHANOU was presented before United States
Magistrate Judge THEODORE H. KATZ and detained.
CONTORINIS, KOULOUROUDIS and PAPARRIZOS were arrested earlier today
in Manhattan, Brooklyn, and Foster City, California, respectively. CONTORINIS
and KOULOUROUDIS are expected to be presented today before United States
Magistrate Judge ANDREW J. PECK in Manhattan federal court. PAPARRIZOS
is expected to be presented today in San Francisco federal court.
CONTORINIS, 44, currently resides in New York, New York. KOULOUROUDIS,
59, currently resides in Brooklyn, New York. PAPARRIZOS, 37, currently
resides in Foster City, California. STEPHANOU, 34, currently resides in
London, England.
STEPHANOU is charged with one count of conspiracy and two counts of
securities fraud. CONTORINIS, KOULOUROUDIS and PAPARRIZOS are each charged
with one count of conspiracy and one count of securities fraud. The conspiracy
charge carries a maximum sentence of 5 years in prison and a maximum fine
of the greater of $250,000, or twice the gross gain or gross loss from
the offense. Each securities fraud count carries a maximum sentence of
20 years in prison and a maximum fine of $5 million, or twice the gross
gain or loss from the offense.
Mr. DASSIN praised the work of the FBI in the investigation of this
case, and thanked the United States Securities and Exchange Commission
for its assistance. Mr. DASSIN also thanked UBS Investment Bank for its
cooperation and assistance.
Assistant United States Attorneys ANDREW L. FISH and REED M. BRODSKY
are in charge of the prosecution.
The charges contained in the Complaints are merely accusations, and
the defendants are presumed innocent unless and until proven guilty.
09-018
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