FBI Says Insider Gave Friends Tips on 2006 Sale of Albertson’s

New York City A former employee for UBS investment bank gave his friends inside tips about the 2006 sale of Albertson's Inc. grocery-store chain and other deals, allowing them to gain more than $7 million from illicit stock trades, authorities said Thursday.

The FBI arrested two of the traders, Joseph Contorinis — a former hedge-fund manager for New York-based investment bank Jefferies & Co. Inc. — and Michael Koulouroudis early Thursday in New York. A third defendant, George Paparrizos, was picked up in Foster City, Calif.

The men were to appear in federal court to face conspiracy and securities fraud charges. There was no immediate response to phone messages left with their lawyers.

Court papers indicate the UBS employee, Nicos Achillea Stephanou, has been cooperating with investigators as part of a plea deal following his arrest in December. His attorney declined comment on Thursday.

A statement from UBS said the bank "has assisted and will continue to assist the authorities in their investigation into the alleged actions of a single UBS employee."

The insider trading scheme mostly revolved around the sale of Albertson's to a consortium made up of Minneapolis-based Supervalu Inc., CVS Corp. of Rhode Island and New York-based Cerberus Capital Management.