Oakton Man Charged In Insider Trading Scheme

Federal authorities arrested Matthew H. Kluger at his Oakton home Wednesday, connecting him to an insider trading scheme that resulted in at least $32 million in illicit profits after investing more than $109 million with co-conspirators.

FBI and IRS agents arrested both Kluger, 50, and a New York man, Garrett D. Bauer, charging them each with one count of conspiracy to commit securities fraud, one count of conspiracy to commit money laundering, and two counts of obstruction of justice. Kluger and Bauer were also charged with 11 and nine counts of securities fraud, respectively.

The complaint filed Monday claims Kluger, Bauer and a co-conspirator began the insider trading scheme in 1994. Documents say Kluger, an attorney with mergers and acquisitions firms, would disclose information available to him about corporate mergers to a co-conspirator, who would pass the information to Bauer, a stock trader. Bauer, 43, would purchase the stocks for the three of them in his own trading account, then sell them once the deal was publicly announced.

Kluger worked for Cravath Swaine & Moore from 1994 until 1997; Skadden, Arps, Slate, Meagher & Flom from 1998 until 2001; and Wilson Sonsini Goodrich & Rosati from 2005 until 2011. Authorities believe Kluger participated in the insider trading scheme during his time at those three firms.

The complaint includes recorded phone conversations among the accused conspirators. Kluger was quoted saying, "“I think there’s a pretty good chance that we get past it. I don’t think that they’re gonna conclude that they have enough to go to court with."

He is also recorded saying, “By the way, I got rid of my computer. I got rid of my iPhone where I had looked up some stock quotes. Those are gone. I mean history. Gone,” and “... if they start looking at me and look at my bank records and all that other stuff it could be, it could get ugly.”

New Jersey U.S. Attorney Paul J. Fishman announced the arrests Tuesday.

“This kind of cheating corrodes confidence in our markets and swindles those who play by the rules. ... Despite Bauer and Kluger’s attempts to thwart law enforcement, our coordinated work has ensured they will not get away with committing fraud in our backyard,” Fishman said.

To read the FBI's full press release, click here. The press release from the Securities Exchange Commission can be found here.