These lawyers need to lawyer up

Get your popcorn: An insider-trading scandal decades in the making is captivating Wall Street.

The story sounds like an episode of Suits: A group of lawyers, with a man named Nicolo Nourafchan as the ringleader, allegedly tipped off traders in Florida, New York, Russia, and Israel about M&A deals, through a web of friends, siblings, coworkers, and even a hairdresser. They used meme-filled groupchats and some creative codewords, in one instance referring to a company preparing to reveal its merger plans as a “rabbi” preparing for “surgery,” according to the Wall Street Journal.

The lucrative scheme first came under scrutiny when the FBI noticed unusual trading activity: suspiciously timed winning trades right before major acquisitions that were handled by the same Boston-based law firm, Goodwin Procter, where—you guessed it—Nourafchan worked.

Nourafchan was arrested last week, and 29 other defendants have been charged so far, including several M&A lawyers at elite firms.

The makings of an illegal enterprise

If you’re wondering why lawyers, of all people, would commit such a brazen crime, then you’ve never met a lawyer and witnessed the hubris firsthand.

Nourafchan started the illegal side hustle when he first gave a trader in Russia information about a healthcare deal and ad-tech buyout over a decade ago. Over the course of the scheme, he recruited other corporate lawyers, and gave traders tips on over a dozen M&A transactions, including Amazon’s acquisition of iRobot, and Burger King buying Tim Hortons.

Nourafchan wouldn’t actually make the trades himself, but would tip off a network of traders, who would then give him lucrative kickbacks. For example, after a group of traders made roughly $90,000 from Nourafchan’s tip about an Amazon acquisition back in 2020, he got a $9,765 wire transfer.

Traders praised Nourafchan’s access, and one even called the method “genius” in a phone call, according to the WSJ. He’s probably rethinking that word right about now.—LB