The Securities and Exchange Commission charged 21 individuals on May 6, 2026, in what prosecutors describe as a sprawling insider trading network that operated for nearly six years across multiple states. At the center of the scheme is Nicolo Nourafchan, a Los Angeles mergers and acquisitions attorney who allegedly misappropriated confidential deal information from his firm’s clients and tipped it to a network of traders who generated millions in illegal profits.
How the scheme worked
Nourafchan worked at a law firm advising companies on pending mergers, acquisitions, and other corporate transactions. Between 2018 and 2024, he allegedly accessed material nonpublic information on more than 12 corporate deals and passed details to Robert Yadgarov of Long Beach, New York. Yadgarov then tipped additional participants who traded ahead of public announcements.
The network expanded when Nourafchan recruited a second corporate lawyer who provided MNPI on additional transactions. Some traders kicked back a portion of their profits to Nourafchan and Yadgarov. Others tipped friends and relatives further down the chain, creating a web of illegal trading that stretched across state lines and involved coordinated buying and selling in advance of deal announcements.
The scheme generated millions of dollars in illicit profits, according to the SEC complaint filed in the U.S. District Court for the District of Massachusetts. Parallel criminal charges were filed by the U.S. Attorney’s Office for the same district, making this one of the largest insider trading prosecutions of 2026. Two defendants are reported to be fugitives in Russia and Israel.
Key facts about the case
| Detail | Information |
|---|---|
| Primary defendants | Nicolo Nourafchan, Robert Yadgarov |
| Scheme duration | 2018 to 2024 (six years) |
| Deals involved | More than 12 pending corporate transactions |
| Total individuals charged | 21 by SEC civil complaint; parallel DOJ criminal charges |
| Primary charges | Antifraud violations of federal securities laws |
| Relief sought | Injunctive relief, disgorgement with interest, civil penalties |
| Court | U.S. District Court for the District of Massachusetts |
What investors lost
Insider trading schemes damage market integrity in ways that are difficult to quantify. When traders front-run mergers using stolen information, they extract profits that would otherwise flow to public shareholders after legitimate disclosure. The SEC alleges the Nourafchan network generated millions in illicit gains across more than a dozen transactions, with some participants reportedly pocketing six-figure profits on single deals.
Retail investors holding shares in target companies during this period may have received lower acquisition premiums because illegal trading activity distorted price discovery ahead of announcements. A target company stock that trades up 20% on rumor before a deal is announced leaves less room for the actual premium that legitimate shareholders would capture. Pension funds and 401(k) plans holding broad market index funds also absorb these losses through reduced overall returns.
The harm extends beyond direct dollar losses. When investors lose trust in market fairness, they reduce equity allocations or demand higher risk premiums, which raises capital costs for legitimate businesses. That is why the SEC and DOJ pursue insider trading aggressively, and why the penalties in this case are expected to be severe.
Red flags that should have been caught
Law firms handling M&A transactions have a duty to restrict access to deal information and monitor employee trading. The fact that Nourafchan allegedly accessed more than 12 transactions over six years without detection suggests weaknesses in information barriers, compliance monitoring, and trade surveillance at his firm.
FINRA and SEC rules require broker-dealers to maintain robust supervisory systems, including automated surveillance that flags concentrated trading ahead of corporate events. When outside counsel firm employees abuse client confidences, the broker-dealers executing the trades may also face scrutiny for failing to detect suspicious trading patterns among tipped accounts.
Common red flags in insider trading networks include clusters of accounts trading the same thinly followed stocks within days of each other, sudden large positions in out-of-the-money call options before merger announcements, and traders with no prior history in a sector making aggressive bets. Surveillance systems are designed to catch these patterns, but they require cooperation between law firm compliance departments and broker-dealer monitoring teams.
Haselkorn & Thibaut fights for investor recovery
Haselkorn & Thibaut is a securities law firm founded by former Wall Street defense attorneys who shifted their practice to represent investors. The firm has recovered over $520 million for clients in securities matters and maintains a 98 percent success rate in resolved nontraded REIT cases. Attorneys are AV Preeminent rated through Martindale-Hubbell, designated as Super Lawyers, and hold a 5.0-star client review average. The firm operates on a contingency basis — no recovery, no fee.
Contact Haselkorn & Thibaut today
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This article is for informational purposes only and does not constitute legal advice. Past results do not guarantee future outcomes. Contact a qualified securities attorney to discuss your specific situation.
