By Nate Raymond

BOSTON, May 7 (Reuters) - An attorney who had been working at Willkie Farr & Gallagher in New York entered a Boston courthouse in February 2025 to make an admission: For years, he tipped two fellow lawyers off to mergers the law firm and his earlier employers had advised on, fueling an insider trading scheme.

The lawyer, Gabriel Gershowitz, is now a key cooperating witness in a major criminal case announced on Wednesday alleging he and other attorneys at major law firms fed tips on about 30 yet-to-be-announced mergers to an insider trading ring, allowing it to illegally make tens of millions of dollars in profits.

Thirty people have been charged, including Gershowitz, who was among nine who had pleaded guilty since 2024 in sealed court proceedings as federal prosecutors in Boston moved to build one of the largest U.S. insider trading cases in years.

Prosecutors and the U.S. Securities and Exchange Commission, which filed a related civil case, say the scheme was orchestrated by Nicolo Nourafchan, a corporate lawyer who worked at the law firms Sidley Austin, Latham & Watkins and Goodwin Procter, and by personal injury attorney Robert Yadgarov.

Nourafchan and Yadgarov were among 19 people who were arrested on Wednesday. Eric Rosen, a ​lawyer for Nourafchan at Dynamis, declined ⁠to comment. A lawyer for Yadgarov could not be identified.

Willkie, in a statement, said it cooperated with investigators and that Gershowitz's alleged conduct "would constitute a severe violation of our clear and well-defined compliance policies, which we take seriously and enforce across the firm." Other law firms involved in the case issued similar statements, and prosecutors say all of them are considered victims.

Should Nourafchan and Yadgarov proceed to trial on securities fraud and related charges, Gershowitz is positioned to be a key witness, with prosecutors in court papers describing him as a cooperator in the criminal case after he pleaded guilty to a securities fraud conspiracy count.

Prosecutors have currently agreed to recommend Gershowitz be sentenced to two years in prison. His sentencing has been repeatedly put off since he pleaded guilty, with prosecutors pointing to his ongoing cooperation in their probe.

E. ​Scott Morvillo, Gershowitz's attorney at Seyfarth Shaw, declined to comment.

COLLEGE FRIENDS

According to charging documents and the SEC, Nourafchan and Yadgarov met Gershowitz while attending George Washington University and stayed friends.

The insider trading scheme began not long after Nourafchan landed a job in 2013 at Sidley Austin, according to prosecutors, and he and Yadgarov began recruiting other lawyers, including one at Wachtell, Lipton, Rosen & Katz who provided Nourafchan with an early tip in 2014, an indictment said.

By 2018, Nourafchan had a new lawyer he wanted to join the scheme, according to the SEC's complaint: Gershowitz, who at the time was working at Weil, Gotshal & Manges.

The SEC says Nourafchan at that time confided in Gershowitz that he had a side business of using secret information about M&A deals and trading on that information. Gershowitz later learned that Yadgarov was also providing such inside information to other traders, the complaint said.

Gershowitz began providing tips by at least 2019, according to prosecutors, when he allegedly tipped Nourafchan and Yadgarov to information about Weil Gotshal client Ardagh Group SA, which agreed that year to combine its food and specialty metal packaging division with Exal Corp.

Weil, in a statement, said it viewed the alleged conduct as "extremely serious" and noted that prosecutors consider it a victim.

Charging papers say Gershowitz continued to participate in the scheme after he joined DLA Piper in 2019 and went on in 2021 to work at Willkie, where his practice focused on transactions involving insurance. He was employed as counsel at Willkie until February 2025, according to his LinkedIn profile. DLA Piper had no comment.

Gershowitz's insider tipping continued through at least 2024, prosecutors say, when he met Yadgarov at a bookstore in New York and told him information concerning a potential planned acquisition of insurer Enstar, a Willkie client, by investment firm Sixth Street, the SEC complaint said.

Gershowitz received cash payments in exchange for his tips, according to prosecutors. He has agreed to forfeit $37,000, which prosecutors say is how much he netted from the scheme.

The case is U.S. v. Gershowitz, U.S. District Court for the District of Massachusetts, No. 1:25-cr-10025.

For the United States: Ian Stearns and Kaitlin O'Donnell of the U.S. Attorney's Office for the District of Massachusetts

For Gershowitz: E. Scott Morvillo of Seyfarth Shaw

Read more:

Lawyers at M&A law firms among 30 charged by US in insider trading scheme