Peteka Pleads Guilty in Morgan Stanley Case

Ronald Peteka pleaded guilty this week in the S.D.N.Y. in a case involving the theft of proprietary information regarding hedge funds from Morgan Stanley & Co. According to the press release from the S.D.N.Y. United States Attorney's Office, Peteka was employed by a Manhattan company in the business of negotiating on behalf of hedge funds the rates that hedge funds pay to Morgan Stanley and its competitors for prime brokerage services. At issue in the case was Peteka's receipt of confidential and proprietary documents from a Morgan Stanley employee that contained information regarding hedge fund clients and the formulas used to calculate certain prime brokerage services. According to prosecutors, Peteka and the Morgan Stanley employee planned to use the information to start a consulting business. Peteka pleaded guilty to one count of interstate transportation of stolen property and faces a total maximum sentence of 10 years in prison and a maximum fine of $250,000. The Morgan Stanley employee pleaded guilty to related charges in January 2007.

The requirement that Peteka plead to a statute containing a maximum sentence of 10 years, rather than one of the numerous statutes with a 5 year maximum, indicates that this plea agreement was late in the process and Peteka may have secured a better deal had he acted more quickly. Of particular note here is the fact that the co-defendant pleaded guilty eighteen months ago, indicating Peteka was somewhat of a hold-out.

See the press release from the United States Attorney's Office for the Southern District of New York here.