Federal prosecutors in Massachusetts unsealed charges against 30 defendants tied to a decade-long insider trading operation that allegedly generated tens of millions of dollars through stolen merger and acquisition information.
The case involved corporate attorneys, traders, middlemen, and overseas associates accused of accessing confidential deal documents from major US law firms before public announcements.
The investigation lands at a time when regulators are increasing scrutiny around insider trading risks in prediction markets such as Polymarket and Kalshi.
Attorneys and Traders Accused in Massive Network
According to the US Attorney’s Office for the District of Massachusetts, the scheme centered around confidential merger and acquisition data stolen from law firms advising on nearly 30 corporate deals.
Federal prosecutors charged 16 defendants in the first indictment with conspiracy to commit securities fraud, securities fraud, and money laundering conspiracy.
Among the defendants were attorneys Nicolo Nourafchan and Robert Yadgarov, who allegedly accessed internal law firm systems to view confidential deal files, including transactions they were not assigned to handle.
Prosecutors said the information was then passed through networks of middlemen and traders in exchange for kickbacks that allegedly reached hundreds of thousands of dollars in cash.
Authorities alleged the operation involved traders across New York, Florida, California, New Jersey, Israel, and Russia. Nineteen defendants were arrested. Two defendants, located in Russia and Israel, remain fugitives.
Burner Phones, Coded Messages, and Hidden Trades
The charging documents describe a highly organized operation designed to avoid law enforcement detection.
Prosecutors alleged the defendants used burner phones, encrypted messaging apps, shell companies, foreign brokerage accounts, and coded language to hide the trades.
One example centered on the planned acquisition of iRobot in 2022. According to prosecutors, Nourafchan accessed confidential deal materials connected to the acquisition while on leave from his law firm.
Days later, traders allegedly started purchasing iRobot securities before the deal became public. Investigators also released coded text exchanges referencing a “Rabbi,” “surgery,” and a “hospital.”
The government said conspirators disguised kickback payments through fake loans, business transactions, intermediaries, and offshore transfers involving locations such as Panama and Switzerland.
Prediction Markets Face Similar Insider Trading Concerns
Platforms such as Polymarket and Kalshi allow users to trade contracts tied to future events, including elections, wars, central bank decisions, company mergers, economic releases, and geopolitical developments.
Unlike traditional stock markets, some prediction contracts rely on very narrow outcomes or information known only to a small group of people before public release.
Regulators now warn that this creates conditions where insiders can gain major advantages over regular traders.
Earlier this year, US Army soldier Gannon Van Dyke was charged after allegedly using classified information tied to an operation against Venezuelan leader Nicolás Maduro to generate more than $400,000 in profits on Polymarket.
Authorities also investigated suspicious trading tied to ceasefire announcements, political races, and weather-related contracts.
The US Senate recently passed a resolution banning senators, staff, and officers from trading on prediction markets over insider trading concerns.
Sen. Bernie Moreno said public office should not become a “side hustle” while lawmakers pushed for broader restrictions on federally connected traders using non-public information.
Related: CFTC Chair Mike Selig Rejects Insider Trading Claims in Prediction Markets