How Wall Street lawyer-turned-insider trader eluded FBI

Every dawn in the early spring of 2011, Matthew Kluger peered out his window, wondering when federal agents would knock at his door.

Kluger, a mergers-and-acquisitions lawyer, says he worried that authorities were closing in on him as the source of illegal tips in a three-man insider-trading ring that had eluded detection for 17 years.

The knock came April 6. U.S. agents handcuffed Kluger, hustled him into a Dodge Intrepid, drove to the Federal Bureau of Investigation office in Manassas, Va., and laid out the case against him. The evidence included tape recordings of Kluger telling the man he tipped to get rid of a cellular phone that could lead back to him - and to do it carefully because the authorities had dogs that can sniff out mobiles.

"I really would like to see this phone go bye-bye ASAP," Kluger said, adding: "Do you want this to be our undoing?"

Kluger's account offers a unique view of insider trading by a midlevel lawyer who moved from one powerful firm to another, exploiting his access to partners and confidential documents. It shows how difficult it is to police such activity when conspirators take care to conceal their crimes and trade with discipline. The trio's downfall came only when one of them changed the routine after almost two decades.

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How Wall Street lawyer-turned-insider trader eluded FBI