Alexei Koval, who prosecutors said conspired with UBS AG investment banker Igor Poteroba to earn almost $1 million in profits through insider trading, sought release on bail today after being indicted.
Koval, 36, of Chicago, was charged with conspiracy to commit securities fraud and three counts of insider trading in a scheme that lasted from 2005 to this March, said prosecutors in the office of Manhattan U.S. Attorney Preet Bharara. The indictment was filed May 20 and made public today.
Poteroba was accused in March in a criminal complaint of leaking to Koval and a third person merger tips on six UBS Healthcare Client mergers and acquisitions which were being considered. The ring used code words such as “frequent flier miles” and references to a Macy’s Inc. wedding registry and earned at least $870,000 from the illegal trades, prosecutors said.
Koval pleaded not guilty when he was arraigned in May, his lawyer, James DeVita, said after court today. Poteroba, 36, who the U.S. said is an executive director at UBS Securities LLC, wasn’t named in today’s indictment. Both men face as long as 20 years in prison if convicted of securities fraud.
Koval has remained in custody since his arrest in Chicago in March. U.S. Magistrate Judge Frank Maas today delayed a hearing on setting bail for two days to give Koval’s lawyer time to find three people acceptable to prosecutors to co-sign the bond. DeVita proposed a $5 million bond.
A federal judge in New York on March 25 set Poteroba’s bail at $5 million.
The U.S. Securities and Exchange Commission filed a related lawsuit against Koval, Poteroba and a third man, Alexander Vorobiev, who now lives in Russia after leaving Toronto. All three men are Russian citizens. The SEC said they earned more than $1 million through the scheme.
Kris Kagel, a spokesman for Zurich-based UBS, said March 24 that the bank was cooperating with the authorities and that Poteroba was on administrative leave.
The case is U.S. v. Poteroba, 10-CR-443, U.S. District Court, Southern District of New York (Manhattan).