Yuck: the SEC announced Monday it had come to a settlement with an informant who'd helped them bust an insider trading scam in which two men passed sensitive business info to each other at Grand Central Station using napkins and Post-it notes, which they then ate.
The SEC had already charged a law firm clerk and stock broker in the scheme. They used a mutual friend to pass material, nonpublic information about clients’ pending corporate transactions from the law firm’s computer systems .
The SEC identified that middleman as Frank Tamayo, a mortage banker, in a subsequent complaint filed in federal court in New Jersey.
Here's how the scheme worked:
"After receiving the tips from the law firm clerk, Tamayo typically met the stockbroker near the clock at the information booth at Grand Central and chewed up or ate post-it notes or napkins after using them to show the stockbroker the ticker symbol of the company that would be acquired. The stockbroker then traded for himself, Tamayo, and other customers."
For his "extensive cooperation" in the investigation, Tamayo will not face any jail time, but must continue cooperating in ongoing investigations.
“Tamayo benefited from his decision to cooperate promptly with the SEC, enter into our cooperation program, and provide significant information that assisted our investigation,” said Robert A. Cohen, Co-Deputy Chief of the SEC Enforcement Division’s Market Abuse Unit.
Moral of the story: This is why most sandwich eaters ask their waitress to hold the Tamayo… But in eating the post-it notes, did he?
Rob covers business, economics and the environment for Fusion. He previously worked at Business Insider. He grew up in Chicago.