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Canadian Attorney Pleads Guilty in Manhattan Federal Court to Two Million Dollars in Insider Trading
PREET BHARARA, the 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 that STANKO
GRMOVSEK, 40, of Ontario, Canada, pleaded guilty today in
Manhattan federal court to participating in an insider trading
scheme which netted more than $2 million in profits. The
Southern District of New York case charging insider trading on
the United States-based stock exchanges stems from charges
announced by the Royal Canadian Mounted Police in the largest
criminal insider trading case in Canada's history. According to
the Information filed in this case and statements made during the
guilty plea proceeding before United States District Judge NAOMI
REICE BUCHWALD:
GRMOVSEK's friend and law school classmate ("CC-1")
was a partner in the Toronto office of Dorsey & Whitney
("Dorsey"), a Minneapolis-based law firm with offices throughout
the United States and the world. CC-1 represented companies in
the United States and abroad, including companies engaged in or
contemplating mergers, acquisitions, and other business
combinations.
From 2006 through February 2008, CC-1 misappropriated
material, non-public information from Dorsey & Whitney and
various of its clients (the "Dorsey Inside Information"). Based
on his access to information about various Dorsey & Whitney
clients, CC-1 obtained confidential, material, nonpublic
information about at least nine acquisitions and passed the
information on to GRMOVSEK. GRMOVSEK then used that information to trade in the securities of the acquired companies on United
States and Canadian-based exchanges.
From 2006 through February 2008, GRMOVSEK traded based
on the following Dorsey Inside Information that had been provided
by CC-1: (a) the proposed acquisition by Medrad, Inc., of Possis
Medical, Inc., (b) the proposed acquisition by Terex Corporation
of ASV, Inc., (c) the proposed acquisition by Yamana Gold of
Desert Sun Mining Corp., (d) the proposed acquisition by Yamana
Gold of Viceroy Exploration, Ltd., (e) the proposed acquisition
by Goldcorp of Glamis Gold, Ltd., (f) the proposed acquisition by
Elara Holdings, Inc., of Direct General Corp., (g) the reported
business combination of Eldorado Gold Corp. and Centerra Gold
Corp., (h) the reported potential acquisition by Uranium One,
Inc., of Energy Metals Corp., and (i) the proposed acquisition by
Chinalco of Peru Copper, Inc. All of these trades occurred on
United States-based exchanges, including the American Stock
Exchange and the New York Stock Exchange.
As a result, GRMOVSEK earned for himself and for CC-1 a
total of over $2 million in illegal profits from the insider
trading on the United States-based exchanges.
At today's proceeding, GRMOVSEK pleaded guilty to one
count of conspiring to commit securities fraud. GRMOVSEK also
separately pleaded guilty today in the Ontario Court of Justice
in Toronto, Canada, to charges stemming from his insider trading
activity with CC-1.
GRMOVSEK is scheduled to be sentenced by Judge BUCHWALD
on November 23, 2009. He faces a maximum sentence of 5 years in
prison.
Mr. BHARARA praised the work of the FBI, the United
States Securities and Exchange Commission, the Ontario Securities
Commission, the Royal Canadian Mounted Police, Integrated Market
Enforcement Team, and the Ministry of the Attorney General
(Ontario) Stock Fraud and Criminal Asset Forfeiture Units.
Assistant United States Attorney RAY LOHIER is in
charge of the prosecution.
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