Former Biglaw Attorney Allegedly Turned His Résumé Into A Decade-Long Insider Trading Operation

Well. This is not great for the legal profession.

The DOJ announced an indictment yesterday against 30 corporate attorneys and financial professionals in connection with a sweeping insider trading scheme that prosecutors say targeted some of the country’s most prominent Biglaw firms. Federal prosecutors in Boston described it as a vast, decade-long scheme that netted the defendants tens of millions of dollars in illicit profits. The indictment referenced six unnamed “victim” firms, which prosecutors characterized as the nation’s premier law firms — and given one of the defendant’s résumés, it checks out.

At the center of the ring is Nicolo Nourafchan, a Yale Law School graduate who, before all this, had a fairly illustrious Biglaw career. He worked at Sidley Austin, Latham & Watkins, Cleary Gottlieb, and Goodwin Procter. The indictment accuses him of accessing law firms’ internal networks to acquire non-public information on pending deals, which he then sold to others. His alleged co-conspirator, New York lawyer Robert Yadgarov, worked alongside him to build out the operation.

The mechanics of the alleged scheme are, frankly, audacious. Nourafchan and Yadgarov allegedly recruited lawyers and others to serve as sources of inside information in exchange for payments of hundreds of thousands of dollars in cash. They then fed that information through a layered network: Nourafchan and Yadgarov provided inside information to a network of traders and middlemen, who placed trades on the tips either on the two lawyers’ behalf or on their own behalf, and many then passed the information on to additional traders, according to prosecutors. All while allegedly using burner phones, coded language, and in-person meetings to hide their actions.

The iRobot episode is a particular highlight of the indictment, and not in a good way. In June 2022, while on a “leave of absence” from the firm advising iRobot, Nourafchan viewed confidential materials about the deal on the law firm’s document management system, despite not working on the matter. A co-defendant, Simon Fensterszaub, then allegedly traded on that information. The Amazon-iRobot deal was eventually abandoned over antitrust concerns, but the alleged trading happened well before that.

The breadth of the charges reflects how far the tentacles of this alleged scheme reached. Sixteen defendants were charged on 10 counts including securities fraud, money laundering conspiracy, aiding and abetting, and obstruction of justice. An additional five defendants face securities fraud, conspiracy to commit securities fraud, and money laundering conspiracy charges. The remaining nine defendants were charged with securities fraud conspiracy. The indictment also referenced unnamed co-conspirators who worked at Biglaw firms as recently as this year, meaning this story may not be fully told yet.

Nineteen of the defendants were arrested on Wednesday. Two defendants located in Russia and Israel are considered fugitives.

The indictment does not name the six victim firms, but the paper trail of Nourafchan’s employment history combined with the nearly 30 M&A deals allegedly implicated in the scheme suggests this touches some of the largest and most prominent M&A practices in the country. A Latham spokesperson offered the following statement, “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.” A Goodwin rep said, “We are 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. We have been cooperating and continue to cooperate fully with law enforcement.” Representatives of Cleary Gottlieb and Sidley Austin have not yet commented.