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Their downfall began when officials of the New York Stock Exchange noticed unusually heavy advance trading in several takeover stocks. Since the 1960s, the exchange has been expanding a computerized Stock Watch system that monitors trading and alerts its experts to suspicious patterns. The exchange immediately tipped off the SEC, which built its case by tracing the trades to Vaskevitch and Sofer and then examining their telephone records. After the SEC filed the civil charges last week, a federal judge froze all current U.S. assets of Vaskevitch and Sofer to prevent the two from pulling the money out of the country. The SEC hopes to force the suspects to disgorge their profits and pay triple damages, all of which could total $16 million. While no criminal charges have been filed against the two suspected insiders, the U.S. Attorney's office is conducting an investigation. If such charges result, Britain and Israel may be asked to extradite Vaskevitch and Sofer to the U.S. for trial.
Even so, the charges may have already shattered the careers of the two cosmopolitan go-getters. Merrill Lynch promptly fired Vaskevitch, citing his failure to give the company an explanation of the SEC's charges. The son of a wealthy Israeli tobacco trader, Vaskevitch had already risen to head a merger operation for a British investment house by age 30, when he joined Merrill Lynch in 1981. He quickly became Merrill's top international mergermaker and lived accordingly in a $2.4 million London home filled with antique furniture.
Sofer, the son of a noted rabbi, is a silver-haired bachelor known for squiring an array of beautiful women around Jerusalem. He began building his fortune in the 1970s by discovering oil in the Sinai peninsula, then racked up more profits by speculating in the wildly bullish Tel Aviv stock market of that period. Sofer today maintains a suite in the Jerusalem Hilton, which he bought in 1982 for $18 million in partnership with a group of U.S. investors, among them Fort Worth Oilman Louis Barnett. The SEC claims that Sofer shared his illegal stock tips with Barnett and another friend, Michael Jesselson, whose father Ludwig Jesselson is the founder of Philip Bros., the U.S. commodity-trading house. So far, neither American has been charged.
For Merrill Lynch last week's accusations were a shock, even though the company was not accused of making any profits from the alleged insider dealing. It was still an end of innocence, since Vaskevitch was the firm's first investment banker to get caught up in the insider-trading scandals. Moreover, the involvement of so high an executive in the largest U.S. brokerage firm sent new waves of shivers through Wall Street. According to the rumor mill, which is now more preoccupied with subpoenas than proxy statements, as many as 60 Wall Streeters will be accused in connection with the Boesky scandal alone. Rumors about possible charges against the investment firm Drexel Burnham Lambert, which had close ties to Boesky, have become so vexing to the company that it has begun taking out two-page newspaper ads listing a roster of 238 contented clients.