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Insider trading can be so easy

Law Library
|Written By Damian J. Penny
Insider trading can be so easy
Tip and Trade: How Two Lawyers Made Millions from Insider Trading by Mark Coakley, ECW Press, 2011, 392 pp., $19.95

Until I read Tip and Trade: How Two Lawyers Made Millions from Insider Trading, I had no idea just how easy insider trading could be. All you need is a job in a law firm handling important corporate clients, access to said law firm’s computer system, and an unscrupulous law school buddy who will make the trades on your behalf. Of course, you may end up in prison or worse, but that’s the price of easy money, isn’t it?

Tip and Trade tells the story of two Osgoode Hall Law School students, Gil Cornblum and Stanko Grmovsek, whose shared interest in comic books and conservative politics made them fast friends. The shy, reserved Cornblum worked with a major Wall Street law firm before joining the Toronto office of Dorsey & Whitney LLP, a major American firm trying to establish itself in the Canadian market. He became so respectable, he lectured other lawyers about securities regulation. On the other hand, the outgoing and audacious Grmovsek tried his hand at lawyering, but eventually gave it up to spend his days playing online poker and buying and selling stocks based on confidential information provided by his friend.

Author Mark Coakley graduated from Osgoode Hall one year after Cornblum and Grmovsek. (I presume he did not read about their crimes in the alumni magazine.) He even worked with them for a while on the school paper, Obiter Dicta, where Grmovsek wrote political columns so far to the right they verged on left-wing parody. (His first column argued for making the poor pay higher tax rates than the rich.)

One of the more amusing chapters of Tip and Trade describes “Goldwater” Grmovsek’s feud, in the pages of Obiter Dicta, with a radical left-wing student who wrote things like, “Jamiliny Grmovsek [and two other writers] are not qualified to talk about exploitation and oppression because they have failed to recognize their own racism!” (“I have no idea what ‘Jamiliny’ means,” writes Coakley, “but it does not seem to be a compliment.”)

Grmovsek, whom Coakley interviewed in jail, was quite a character. Everyone visits Westminster Abbey when they visit London, England, but Grmovsek convinced Cornblum that they should put on their best suits and walk right into that historic cathedral while a funeral was going on. Specifically, Princess Diana’s funeral. Grmovsek would keep up his charming facade to the end, even joking with reporters at his sentencing hearing.

It’s kind of easy to understand why an introvert like Cornblum would be drawn under Grmovsek’s spell, and it ended up being a decidedly unequal partnership: Cornblum did all the grunt work, digging for inside information that would make them some money, while Grmovsek made the trades — and also pocketed even more money, without Cornblum’s knowledge, by making more trades using his friends’ and relatives’ accounts.

In the end, Canadian and American regulators closed in on Grmovsek and Cornblum, cornered rats who turned on each other in the hopes of keeping jail time to a minimum. The most gripping chapters of Tip and Trade describe Grmovsek’s life at the maximum-security Millhaven Institution — where inmates make “cigarettes” out of nicotine patches, potato-peel scraps, and Bible paper — and Cornblum’s decision to spare his family further humiliation and ruin by taking his own life.

Tip and Trade tells a compelling story, but what should be the most compelling part of the book — Grmovsek and Cornblum’s increasing paranoia, as Canadian and American authorities move in, and their eventual arrest and sentencing — is undone by Coakley’s curious decision to reprint verbatim transcripts from police interviews and court appearances. There’s some fascinating material in there, but you have to wade through a lot of extraneous information and dry prose to get to it. If Coakley felt so strongly about including the complete transcripts in his book, there’s no reason they couldn’t have been included as appendices.

Even more irritating are Coakley’s repeated attempts to tie his subjects’ political conservatism to their illegal activities. Early on, Coakley denounces conservatism as “a kind of fraud . . . to defend the interests of the rich,” and throughout the book he reprints many samples of Grmovsek’s right-wing trolling on the Huffington Post, reminds us that Grmovsek considered Conrad Black a hero, and treats us to his simplistic, ill-informed opinions about conservatism and right-of-centre thinkers. I didn’t know Antonin Scalia and Clarence Thomas were “neoconservatives” until I read it in Tip and Trade.

Still, the book does show just how easy it can be for a lawyer to take advantage of his clients’ and colleagues’ confidential information, and bring the entire profession into disrepute. It should also serve as a warning for any struggling and/or selfish practitioner tempted to try something like this. Grmovsek and Cornblum lived the high life for years, but they lost everything.

The most important lesson I learned from Tip and Trade? Be nice to your law school classmates, because they could eventually write a book about you.

Read more about Grmovsek and Cornblum in the Canadian Lawyer March 2010 cover story, “When temptation bites.”