Securities Law

Surviving Law School Buddy Gets 39-Month Term in $9M Insider-Trading Scheme

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Stanko Grmovsek began his stock-trading career while he was still in law school, prosecutors say, turning a $30,000 student loan into $300,000.

Then, in what he called “the worst decision in my life” in a court statement, he and a former roommate at Osgoode Hall School of Law began operating an insider-trading scheme after he graduated in 1994, using confidential information that his classmate, Gil Cornblum, obtained while working at various law firms in Canada and the United States, according to the Ontario Securities Commission.

Prosecutors say he made as much as $9 or $10 million in U..S. dollars between 1994 and 2008 with the help of tips from Cornblum about dozens of companies. Today Grmovsek was sentenced to 39 months for his role in the scheme, after pleading guilty last year to insider-trading charges in Canada and the U.S., CBC News and the Financial Post report.

Cornblum, who worked as an associate at Sullivan & Cromwell and a partner at Dorsey & Whitney during the 1994 to 2008 time period, committed suicide last October on the eve of a plea deal. He was fired by Dorsey & Whitney in 2008.

Grmovsek also practiced initially after graduating from law school, but stopped doing so in 1997 in order to work full-time on the insider-trading scheme, the OSC says. It investigated the case jointly with U.S. and other Canadian authorities.

In addition to serving the prison term, Grmovsek must also disgorge all profits and is permanently banned from making further securities purchases or serving as an officer or director at a registered firm.

Additional and related coverage: “Lawyer Raided Sullivan & Cromwell Offices for Inside Info Years Ago, Court Filings Say” “Law Firms Review Compliance Measures After Attorney Arrests in Insider Cases” “Another Former Ropes & Gray Associate Is Charged in Galleon Case”

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