Ex-Morgan Stanley Client Services Representative Stole Proprietary Information About Hedge Funds, Says U.S. Attorney Michael Garcia

Ronald Peteka, a former Morgan Stanley & Co. client services representative, was arrested last month. According to Michael Garcia, the U.S. Attorney for the Southern District of New York, Peteka allegedly stole proprietary information about hedge funds from Morgan Stanley while working with one of the brokerage firm’s consultants for the information technology department. The consultant, named Ira Chilowitz, who was in charge of establishing secure computer connections between prime brokerage clients and Morgan Stanley, pled guilty early this year to four felony counts connected to the allegations against Peteka.

Among the list of allegedly stolen items is the names of all of Morgan Stanley’s major brokerage hedge fund clients, as well as the formulas that were used to figure out the rates paid by them for specific services. This list, according to Garcia, could be of great value to Morgan Stanley’s competition. Garcia said both Chilowitz and Peteka conspired to misappropriate this list.

The U.S. Attorney said that when Chilowitz pled guilty, he confessed that the reason he stole the list was because he anticipated that it could possibly help both him and Peteka gather new business for a consulting company they had planned on setting up together.

In the complaint filed against him, Peteka is also accused of meeting with other ex-Morgan Stanley employee, proposing the consulting firm idea to this person, and telling this person about the list, saying “you don’t what to know where I got this.”

Chilowitz has not yet been sentenced. Peteka faces $250,000 in fines and a prison sentence of up to five years.

If you are someone who has been the victim of investment fraud, contact Shepherd Smith and Edwards today to schedule your free consultation. Our attorneys have spent years successfully helping investors recover their losses. Visit our firm’s Web site for more information.

Related Web Resources:

Ex-Morgan Stanley Worker Charged, AP/Biz.Yahoo.com, April 4, 2007

IT Geek Gets Caught with Morgan Stanley “Client Rate List,” LinuxElectronics, February 5, 2007
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