FBI charges 30 in decade-long law-firm M&A insider ring

The FBI Boston Division charged 30 people on Wednesday in a decade-long insider trading ring that prosecutors say stole confidential mergers and acquisitions documents from U.S. law firms and traded ahead of nearly 30 deals. Authorities say the group funneled tens of millions of dollars through brokerage accounts and shell companies in Russia, Israel, Panama and Switzerland.

Federal charging papers allege that licensed corporate attorney Nicolo Nourafchan accessed his firm’s internal systems to view confidential deal documents and shared that material with co-conspirators, including attorney Robert Yadgarov. Prosecutors say the trades produced what they describe as tens of millions of dollars in illicit profits and were moved through foreign brokerages to conceal the source and destination of funds.

Court filings describe the use of burner phones, encrypted messaging apps and coded language to hide communications. Investigators cite an example in which participants referred to a deal as a “sick rabbi awaiting surgery.” Brokerage accounts were opened in the names of shell entities and used to receive and transfer trading proceeds, prosecutors allege.

The FBI executed arrests in Alabama, California, Florida, New Jersey and New York on Wednesday. Nineteen people were taken into custody and face federal charges that carry statutory maximum penalties of up to 25 years in prison per count. Two defendants believed to be in Russia and Israel remain at large, according to the government.

Prosecutors are continuing to trace the flow of funds through layers of shell companies and foreign accounts. The investigation, led by the U.S. Attorney’s Office in Boston and the FBI, remains active, and officials say further charges or arrests are possible as they analyze records, communications and financial transactions.

The agency announcement quoted Ted E. Docks, FBI Boston Special Agent in Charge, saying, “Anyone who engages in insider trading fundamentally undermines the trust necessary for our financial markets to function.”

Federal authorities have been expanding insider trading enforcement beyond traditional equity markets. In 2022, prosecutors brought the first criminal insider trading case involving crypto assets, in which a former product manager pleaded guilty to tipping others about upcoming token listings and received a 24-month prison sentence and an order to forfeit cryptocurrency holdings. Prosecutors say the same legal theory-using material nonpublic information to trade-applies across stocks and digital assets.

As the case proceeds, investigators say they will continue to follow the money and examine the role of professional gatekeepers at law firms and intermediaries used to execute and hide the trades.