A stock broker who worked at Oppenheimer and Morgan Stanley and the managing clerk of New York law firm Simpson Thacher & Bartlett were arrested Wednesday on charges of participating in a four-year insider trading scheme involving more than $33 million in illegal trades, authorities said.
Steven Metro, 40, of Katonah, N.Y., and 42-year-old Vladimir Eydelman of Colts Neck, N.J., netted more than $5.6 million in the trades since 2009, New Jersey U.S. Attorney Paul J. Fishman said.
Both men are accused of conspiracy and multiple counts of securities fraud and tender offer fraud.
Authorities said Metro stole insider information from Simpson Thacher, one of the nation's premier mergers and acquisitions law firms, and passed it on to a friend on a small piece of paper.
Federal authorities say the friend, who is now a cooperating whiteness in the case, would then divulge the information to Eydelman, a stock broker who worked at Oppenheimer and later at Morgan Stanley.
"They allegedly rigged the system by exploiting sensitive information that was not available to other investors," Fishman said. "This kind of activity undermines the integrity of our financial markets and weakens investor confidence."
The two defendants are scheduled to appear in federal court in Newark, N.J., on Wednesday afternoon.
—By CNBC's Karma Allen.