By Nate Raymond and Svea Herbst-Bayliss
BOSTON, May 8 (Reuters) – A former attorney at Wachtell, Lipton, Rosen & Katz who went on to join an investment bank is an unindicted co-conspirator in a vast insider trading case that involved tips from lawyers on corporate mergers, two people familiar with the matter said.
Avi Sutton, who joined the boutique investment bank LionTree in 2022, was identified by the people as the unnamed former Wachtell attorney referenced in an indictment unsealed on Wednesday, when prosecutors unveiled charges against 30 people in the decade-long scheme. The people asked not to be identified to discuss information that was not public.
Prosecutors said prominent law firms and a boutique investment bank were among the victims of the insider trading conspiracy, which generated tens of millions of dollars in illegal profits and is one of the largest to be charged in years.
Sutton, who was an associate at the Wall Street law firm Wachtell from 2013 to 2022, was not identified by name in the indictments and is not among those charged. The people familiar with the situation said he is the unnamed lawyer identified in one of the indictments as “CC-2” and described by prosecutors as a participant in the scheme.
Sutton, who after leaving Wachtell became New York-based LionTree’s general counsel and chief operating officer, did not respond to repeated emailed requests for comment.
LionTree early on Thursday had included Sutton’s photo on its website and described him as part of its executive leadership, although his name and other information about him were no longer on the website as of Thursday afternoon.
The New York-based company, which focuses on technology, media and telecommunications deals, did not immediately respond to calls and emails requesting comment.
LionTree and Wachtell were not identified by name in the indictment, which referred to them as “Investment Bank A” and “Law Firm F.” Reuters identified them based on their work on mergers described in the indictment, Sutton’s LinkedIn page, and information from the two sources. Wachtell confirmed it was among the law firms that prosecutors listed as victims.
New York-based Wachtell, one of Wall Street’s most prominent law firms advising on hundreds of billions of dollars in merger deals each year, issued a statement on Wednesday that did not identify Sutton as the lawyer in question but said the individual had left the firm more than four years ago.
“There are no allegations of wrongdoing against the firm,” the law firm said. “Wachtell Lipton has cooperated fully with the U.S. Attorney’s office and will continue to do so.”
A spokesperson for U.S. Attorney Leah Foley, whose office is prosecuting the case, declined to comment.
DECADE-LONG SCHEME
Prosecutors allege that, from 2014 to 2024, attorneys at major law firms worked to obtain and misappropriate confidential details from their employers on nearly 30 yet-to-be-announced merger deals to fuel an insider trading ring.
Prosecutors and the U.S. Securities and Exchange Commission, which filed a related civil case against several of the defendants, say the scheme was orchestrated by Nicolo Nourafchan, a corporate lawyer who worked at the law firms Sidley Austin, Latham & Watkins and Goodwin Procter, and by personal injury attorney Robert Yadgarov.
Nourafchan and Yadgarov were among 19 people who were arrested on Wednesday. Eric Rosen, a lawyer for Nourafchan at Dynamis, declined to comment. Yadgarov did not respond to a request for comment.
Several of the law firms caught up in the case, including Goodwin and Latham, have like Wachtell confirmed their roles in the case and described the alleged conduct as a violation of their trust and policies.
According to the indictment against them, Nourafchan and Yadgarov worked for years to obtain confidential information about M&A deals under way at Nourafchan’s law firms and other firms employing lawyers they recruited into their scheme.
The indictment said lawyer CC-2, whom the sources identified as Sutton, started in 2014 to provide the two lawyers tips about forthcoming M&A deals involving Wachtell’s clients, in exchange for money.
The earliest example cited was in August 2014, when he tipped the potential acquisition of Canadian coffee and restaurant chain Tim Hortons, which Burger King announced days later it planned to buy, followed over the years by tips on deals involving Actelion, C.R. Bard, Qualcomm, Express Scripts and others.
After joining LionTree, he provided a tip in August 2023 about a potential deal involving eBay-backed online classifieds group Adevinta, the indictment said.
(Reporting by Nate Raymond and Svea Herbst-Bayliss in Boston; Editing by David Bario and Edmund Klamann)
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