Israeli man sentenced for Insider Trading Scheme

An Israeli man known as DOV MALNIK along with his partner and co-defendant, Toman Feingold also another Israeli has been sentenced to 30 months in prison as announced by the United States Attorney for the Southern District of New York. Dov Malinik who is a finance expert and securities trader was deported from Switzerland to face trial in the United State, he accepted responsibility and pled guilty for his role in the insider trading scheme, based on confidential information he got from an insider at an international investment banker which was given to MALNIK in exchange for pecuniary benefits. He was sentenced on November 19, 2021 by Judge Victor Marrero.

The facts of this case were that the defendants were into the business of securities trading who made use of their own names and also were in charge of various organisations ind investment fund, and through this means, for at least a period of four years; 2013 to 2017, Dov Malnik was involved in gigantic circle of insider trading which allowed him access to Non Public Information which were material on issues such as the purchase or intended purchase of public companies. This information was received from a trader who had his residence in Switzerland, however Dov Malnik was fully aware that the information was obtained one way or another from persons with access to such information at investment banks and public companies, which was an extreme breach of their fiduciary relationship. This awareness led the defendant to make appropriate investments leading to huge profit for both the defendants and their insider contact.

These acts of the defendants and the insider contact were concealed or attempted to be concealed by utilizing the use of encrypted messages, burner phone communication, and also using offshore companies to make their securities trade. There was the instance where the Defendant opened a British Virgin Island company in Switzerland and used the company name to trade stocks for which the defendant had already received some Material nonpublic information which returned huge profits. In the same vein, the defendants made use of curious means to send the share of their insider contact to them, which was to initially send the funds to an account that had agreed to hold the funds for the insider contact, however upon further scrutiny they curated fake documents meant to deceive the bank as to the purpose of the funds. 

The conviction of the Defendants has greatly helped the law enforcement to apprehend other persons involved in this massive insider trading scheme including an investment banker and an executive for a top pharmaceutical company. 

In his reaction, the U.S Attorney stressed the fact that they will continue to be intentional in protecting the integrity of the Capital Market in the country, and they will ensure that insider traders are held to account for their use of material nonpublic information, without placing a restriction on where the information was gotten or who it was sent to.

The Defendant was also required to pay a fine of $50,000 and was also made to forfeit the sum of $1,594,779.

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