Biglaw, Crime, Insider Trading, Lawyer of the Day, Mergers and Acquisitions, Wall Street, White-Collar Crime

Ex-Associate at Three Top Firms Charged With Massive Insider Trading

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There’s no contest today for Lawyer of the Day honors. The clear winner is Matthew Kluger, a former associate at three leading law firms, who has been charged in a massive insider trading case. Kluger stands accused of reaping more than $32 million in profit over the course of a 17-year conspiracy, which also allegedly involved a trader, Garrett Bauer. (Kluger and Bauer might not be as big as Raj Rajaratnam, who’s pretty hefty, but their supposed scheme is nothing to scoff at.)

The charges were filed by Paul Fishman, U.S. Attorney for New Jersey (disclosure: my former office). Fishman claims that Matt Kluger passed along insider information that eventually made its way, via an unnamed co-conspirator, to Garrett Bauer, who traded on it. According to the complaint, Kluger and Bauer invested more than $109 million in the scheme, which yielded profits of more than $32.2 million.

Where did Kluger allegedly obtain the inside information? From the three Biglaw firms where he once worked on M&A deals….

The three firms that Matthew Kluger worked at are among the bluest of blue-chip firms: Cravath, Swaine & Moore; Skadden Arps; and, most recently, Wilson Sonsini. Here are the details about Kluger’s law firm stints, via Reuters:

According to the complaint, Kluger worked from December 2005 until this March 11 as a senior associate in Wilson Sonsini’s office in Washington, D.C., where his annual salary was about $290,000. Kluger worked at Cravath from 1994 to 1997, and at Skadden from 1998 to 2001, the complaint said.

Making almost $300K is a pretty nice living. But remember, earning $250K doesn’t make you rich. If you want real wealth, supplementation of your income is necessary.

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Matt Kluger was smart enough to get into and graduate from NYU Law School, and he was smart enough to get hired by, and work for many years at, three major law firms. According to the complaint, he was also smart enough to take measures to avoid detection of his crimes: Kluger, Bauer and the co-conspirator allegedly used pay phones and prepaid cellphones, later tossed in the trash, for their discussions.

But perhaps they weren’t smart enough — apparently the feds have wiretap evidence. Matt Kluger and Garrett Bauer have been hit with 17 counts, including 11 for insider trading, four for obstruction of justice, and two conspiracy counts (to commit insider trading and to commit money laundering).

We’ll keep you posted. Federal law enforcement authorities, including Paul Fishman and also SEC officials, plan to discuss the charges at a noon press conference. We’ll update this story if any new and interesting details emerge.

Speaking of new and interesting details… given how many Biglaw firms Matthew Kluger has worked at, surely some Above the Law readers must know him personally. If you have any firsthand information you can share — even innocuous stuff, like quirky personal habits, or favorite foods from the firm cafeteria — please email us, subject line “Matthew Kluger,” or text us, at 646-820-TIPS (646-820-8477). Thanks.

UPDATE (12:10 PM): Courtney Comstock has additional tidbits about Kluger over at Clusterstock / Business Insider, including details from his (now-removed) Wilson Sonsini bio (reprinted in full below). Kluger graduated from Cornell in 1984, with a B.S. in Hotel Administration (that’s a science?), and from NYU Law School in 1995, cum laude.

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UPDATE (1:15 PM): Over at our sister site, Dealbreaker, Bess Levin pulls out some choice portions from the complaint (here and here).

UPDATE (4/7/11): Comments from representatives of Cravath, Skadden and Wilson Sonsini are collected at Am Law Daily.

UPDATE (12/21/11): There have been subsequent developments in the story of Matt Kluger. Our coverage is collected here (latest stories at the top).

Two arrested for insider trading tied to law firms [Reuters]
BigLaw Lawyer Named in $32M Insider-Trading Probe [WSJ Law Blog]
Associate Charged in Alleged $32M Insider Trading Scheme Involving 3 BigLaw Firms [ABA Journal]
Former Big Law Associate Charged in Insider Trading Scheme [Am Law Daily]

WILSON SONSINI GOODRICH & ROSATIO — MATTHEW KLUGER — ATTORNEY BIO

EXPERIENCE:

Matt Kluger is a senior associate in the firm’s Washington, D.C., office, where he concentrates primarily on mergers and acquisitions and other corporate matters.

Matt has worked on a variety of high-profile merger and acquisition transactions representing public and private companies across a broad range of industries, as well as several leading investment banks and private equity firms.

Matt has also represented many clients in complex cross-border transactions, including the first-ever hostile tender offer in Chile and a simultaneous hostile exchange offer in the U.S. Matt’s clients have been acquirers, targets, financial advisors, and special committees, and he has worked on both negotiated and hostile transactions.

Prior to attending law school, Matt had a seven-year career in the automobile retail industry, culminating as general manager of a large-volume Toyota dealership in California. Prior to joining Wilson Sonsini Goodrich & Rosati, Matt was an associate at Cravath, Swaine & Moore and Skadden, Arps, Slate, Meagher & Flom and associate general counsel at Asbury Automotive Group, Inc., a Fortune 500 automotive retailer.

SELECT CLIENTS:

* CBS
* Check Point Software Technologies, Ltd.
* Computer Horizons
* Ducati North America Inc.
* Fiat S.p.A.
* Huntsman Chemical Corporation
* IBM
* Johnson & Johnson
* Kansas City Power & Light
* Landry’s Restaurants
* Life RE
* MovieFone
Matt Kluger
continued
* Nuance Communications
* Phone.com
* RiteAid Corporation
* Sun International Hotels
* TechBooks
* Texas Pacific Group
* The AES Corporation
* The Goodson Newspaper Group
* Thomas Weisel Partners
* Unilever
* Vivendi SA

EDUCATION:

* J.D., New York University School of Law, 1995
Cum Laude
* B.S., Hotel Administration, Cornell University, 1984

ADMISSIONS:

* Bar of the District of Columbia
* State Bar of New Jersey
* State Bar of New York

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