NEW YORK, July 25 (Reuters) - A Long Island, New York, investment adviser accused of engaging in insider trading after being tipped off about Pfizer Inc's $3.6 billion acquisition of King Pharmaceuticals Inc pleaded guilty on Tuesday, federal prosecutors said.
Tibor Klein, 43, pleaded guilty to one count of conspiracy to commit securities fraud before U.S. District Judge Joan Azrack in federal court in Brooklyn, New York. Klein faces a maximum sentence of five years in prison.
New York-based Pfizer announced it would acquire Tennessee-based King in October 2010.
Prosecutors have said Klein learned about the deal in advance from Robert Schulman, who at the time was a partner at the law firm of Hunton & Williams in Washington, D.C., and had represented King in patent litigation since 2009.
Prosecutors said Klein, founder of Valley Stream-based, Klein Financial Services, then bought King securities for himself, Schulman and clients, and passed the tip to his friend Michael Shechtman, a Florida stockbroker, resulting in more than $400,000 of overall illegal profit.
Schulman, of McLean, Virginia, was convicted on insider trading charges in March by a jury in Brooklyn federal court. He was a partner at the law firm Arent Fox in Washington, D.C. at the time of his arrest last August, and was later put on leave.
Shechtman, a former Ameriprise Financial Inc stockbroker, pleaded guilty in Brooklyn in November 2014 to a conspiracy charge, and has cooperated with prosecutors. He has not yet been sentenced.
The U.S. Securities and Exchange Commission filed a related civil lawsuit in September 2013 against Klein and Shechtman in federal court in West Palm Beach, Florida. That case was later put on hold until the criminal case was resolved.
Although the SEC did not sue Schulman, it alleged that he became intoxicated on several glasses of wine while dining at home with his wife and Klein in August 2010, and blurted out: "It would be nice to be King for a day."
Klein took the hint and bought 60,600 King shares, including 800 for himself and 3,000 for Schulman, on the next trading day, the SEC said. (Reporting by Brendan Pierson in New York; Editing by Peter Cooney)