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by Mike Caswell

The U.S. Securities and Exchange Commission and prosecutors in New Jersey have charged a group of men for an insider trading scheme that involved a "systematic theft" of confidential information from investment banks. The government claims that the men posed as managers of large investment funds to obtain advance information on secondary offerings. They then allegedly used their knowledge of those offerings to make $3.2-million from short positions. (All figures are in U.S. dollars.)

The charges involve short sales of at least 14 companies, including two Toronto Stock Exchange listings. According to the SEC, the men learned in advance of undermarket offerings that, when made public, caused the stocks in question to decline. The stocks the men targeted included TSX-listed AEterna Zentaris Inc. and Solitario Exploration & Royalty Corp.

FBI agents arrested the four men at their homes Wednesday morning. Court filings identify them as Steven Fishoff, 58, of Westlake Village, Calif.; Ronald Chernin, 66, of Oak Park, Calif.; Steven Costantin, 54, of Farmingdale, N.J.; and Paul Petrello, 53, of Boca Raton, Fla. The men face charges of securities fraud and conspiracy to commit securities fraud.

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