Lawyers at Goodwin Procter were representing iRobot Corp., the maker of the Roomba vacuum cleaners, as acquisition talks with Amazon.com Inc. intensified in the summer of 2022. According to U.S. authorities, a network of over a dozen people, including three brothers and a hairdresser, began accumulating iRobot stock and options in the following months. When the deal was announced in August, the group allegedly profited by more than US$1.7 million. Two members even exchanged text messages featuring champagne emojis.
Prosecutors and securities regulators now assert that the intelligence for this scheme originated from within Goodwin Procter itself. Criminal charges unsealed on Wednesday reveal that Nicolo Nourafchan, a 43-year-old Yale Law graduate who worked at elite firms including Sidley Austin, Latham & Watkins, and Goodwin, was at the center of a decade-long insider trading operation. The scheme allegedly spanned from Ivy League law schools to Wall Street law offices, siphoning confidential deal information and funneling it to a network of friends and contacts.
Authorities have charged 30 individuals, while the U.S. Securities and Exchange Commission has filed separate civil charges against 21 individuals. Mergers and acquisitions advisory has become one of the most lucrative areas for Wall Street law firms, with even junior associates earning hundreds of thousands of dollars annually. This work makes firms custodians of sensitive information on multibillion-dollar transactions, forcing them to place significant trust in their employees.
“What’s outstanding about this is it was a really comprehensive plan over almost a decade to mine law firm information for serial mergers,” said David Axelrod, a litigator at Ballard Spahr and former U.S. prosecutor.
In a statement, Goodwin said: “We are deeply disappointed that a former employee is alleged to have violated the trust placed in him and misused confidential information as part of a broader criminal scheme affecting multiple law firms and their clients.”
Over the decade, Nourafchan allegedly passed information on pending deals to his George Washington University classmate Robert Yadgarov, a personal injury lawyer, and others. The duo also recruited two other early-career corporate lawyers to share information. In 2014, they involved Avi Sutton, a Yale Law School classmate of Nourafchan, who allegedly provided his first tip regarding Burger King’s acquisition of Tim Hortons while working at Wachtell. Sutton has not been indicted and appears as an unnamed co-conspirator in one of the indictments.
