Lawyers linked to top US firms accused in insider trading scheme

US authorities have accused lawyers linked to some of America’s top law firms of passing confidential M&A information to an insider trading network that made millions of dollars in illegal profits.

The allegations were unveiled through parallel criminal and civil proceedings brought respectively by the US Department of Justice and the SEC in Boston on Wednesday.

In total, the cases charge 30 people, alleging that M&A lawyers leaked confidential information on some of the biggest US deals of the last decade to a trading ring made up of friends, relatives and acquaintances.

While prosecutors did not identify the law firms involved, descriptions of the deals cited in the filings indicate the firms included Wachtell, Latham & Watkins and Goodwin.

Inside the scheme

At the centre of the cases is Nicolo Nourafchan, a lawyer who worked at several major firms - including Goodwin and Latham - between 2013 and 2023. Prosecutors allege Nourafchan conspired with a college classmate to recruit lawyers working on high-profile deals to provide inside information.

According to the complaints, Nourafchan then funnelled those tips to a wider network of friends and acquaintances who used the information to place trades ahead of deal announcements.

The SEC’s civil complaint sets out estimated profits linked to individual defendants, with the largest allegedly generating around $3 million in gains and the second-largest roughly $1.2 million.

Law firms respond

There is no suggestion of wrongdoing by the law firms themselves.

In statements shared with Bloomberg, Goodwin and Wachtell said they were cooperating with law enforcement authorities.

Latham & Watkins said: “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.”