A sprawling insider trading operation allegedly fuelled by confidential merger documents stolen from elite law firms has triggered one of the largest securities fraud crackdowns in recent years in the United States. Federal prosecutors in Boston say the network ran quietly for nearly a decade, drawing in lawyers, traders and intermediaries who allegedly turned privileged corporate information into millions of dollars.
Thirty individuals have now been charged. Nineteen were arrested this week, while several others had already pleaded guilty in proceedings kept under seal until now.
At the centre of the case, according to investigators, is Nicolo Nourafchan — a Yale Law School graduate who previously worked at prominent corporate law firms handling high-stakes mergers and acquisitions. Prosecutors allege that during his time at firms including Sidley Austin, Latham & Watkins and Goodwin Procter, he gained access to confidential deal materials tied to major corporate takeovers before they became public.
Authorities claim the information was then funnelled into a wider trading circle coordinated alongside New York-based personal injury lawyer Robert Yadgarov. Traders allegedly bought stocks ahead of takeover announcements, profiting once share prices surged after the deals were revealed publicly.
Investigators say the scheme touched nearly 30 merger transactions.
According to court filings, confidential law firm databases became a goldmine for the accused. Prosecutors allege participants exploited internal document management systems to obtain sensitive information about pending acquisitions, then passed those details through layers of middlemen and traders in exchange for kickbacks.
Federal officials framed the case not merely as financial fraud, but as a betrayal of professional trust.
US Attorney Leah Foley said the accused exploited the “special access and ethical duties” attached to legal practice licences, turning privileged corporate information into a personal revenue stream.
Two accused individuals are believed to be outside the United States — one in Russia and another in Israel — and are currently being treated as fugitives.
The investigation also swept up attorney Gabriel Gershowitz, who previously worked at firms including Weil, Gotshal & Manges, DLA Piper and Willkie Farr & Gallagher. Prosecutors allege he supplied confidential merger information beginning in 2019 after reconnecting with Nourafchan and Yadgarov through old college ties. Gershowitz pleaded guilty earlier last year.
Several law firms named indirectly in the investigation stressed they were victims rather than participants. Wachtell, Lipton, Rosen & Katz acknowledged that one of its former lawyers had been implicated and said it cooperated with investigators. Latham & Watkins stated that the alleged conduct, if proven, would violate the firm’s internal compliance safeguards. Goodwin Procter similarly said it was deeply disturbed by the allegations.
Among the corporate transactions cited in the indictment was Amazon’s proposed acquisition of iRobot in 2022 — a deal that eventually collapsed after regulatory opposition. Prosecutors allege Nourafchan accessed confidential files linked to the transaction while employed at Goodwin Procter, even during a period when he was reportedly on leave from the firm.
The criminal case has been paired with a parallel civil action filed by the US Securities and Exchange Commission, signalling that authorities intend to pursue both financial penalties and prison sentences as the investigation unfolds.
