Lawyers say recent securities-fraud cases have a new twist: they are the product of the daily humdrum of two adults doing their jobs remotely
4 min
Steven Teixeira’s use of his girlfriend’s laptop began innocently enough when she asked him to keep an eye on her work email while she went to fitness classes and ran errands.
As they weathered the pandemic from their apartment in Queens, N.Y., he gave in to temptation. His sweetheart worked as an executive assistant at Morgan Stanley, and her calendar invites included meetings about planned mergers and acquisitions that involved the investment bank.
Teixeira, a compliance executive at a payment-processing company whom she intended to marry, used the information to trade in advance of the deals. It netted him thousands in profits, promises of Rolex watches from friends he tipped off, and the scrutiny of federal officials probing insider trading. He pleaded guilty to a dozen fraud charges in June.
There is a rich history in securities fraud of “pillow talk” cases, in which insider traders glean confidential information from romantic partners. The Covid era offered a twist: Secrets weren’t spilled in the bedroom or over a bottle of wine, but during the humdrum routine of two adults working from home.
“During Covid, there was an uptick in brazen conduct,” said Edward Imperatore, a defence lawyer at law firm Morrison & Foerster. “In a work-from-home environment, people acted with more impunity.”
Another recent case snared a boyfriend who was training to work for the Federal Bureau of Investigation. Seth Markin pleaded guilty in December to trading on information he purloined from his lawyer girlfriend, an associate in the Washington office of law firm Covington & Burling.
In 2021, she was working on a pharmaceutical acquisition from her one-bedroom apartment, where Markin spent days at a time. According to prosecutors, she trusted him because he told her he had a security clearance, was going to be an FBI agent, and wanted to marry her.
Prosecutors said Markin passed on tips that led to at least 20 people trading based on confidential information. “I knew that my behavior was wrong,” Markin told the judge during his plea hearing. He is scheduled to be sentenced in March.
Representatives for the FBI and Covington declined to comment.
In Teixeira’s case, he was aided by a mouse-jiggler he bought that ensured his girlfriend’s laptop wouldn’t lock when she wasn’t using it, according to court documents. He has been cooperating with prosecutors and is scheduled to testify this year at the trial of his former friend, Jordan Meadow, who at the time was a stockbroker with Spartan Capital Securities. Meadow made more than $700,000 trading on Teixeira’s information and used the tips to advise clients who made millions, prosecutors allege.
“Yo you see UFS,” Meadow texted Teixeira, referencing the stock symbol of a company involved in a $3 billion deal, according to the indictment. He then asked for more nonpublic information, texting, “Feed me.”
Meadow has pleaded not guilty to the eight charges he is facing. Lawyers for Meadow and Spartan declined to comment, as did a spokeswoman for Morgan Stanley, and a lawyer for Teixeira didn’t respond to requests for comment.
In 2022, the Securities and Exchange Commission settled with a New Jersey man who it accused of illegally trading on inside information he heard when his domestic partner, who worked in marketing for an IT company, participated in calls from home, including an 11:30 p.m. videoconference in a home-office adjacent to their bedroom. Although he typically discussed his trades with her, in this case he hid them, executing the transactions from his work office, the SEC said. The man, who didn’t admit wrongdoing, paid $180,000.
One thing hasn’t changed since the earliest days of pillow talk: It is usually the men who can’t resist the urge to take advantage of their confidential information.
“Insider trading is an equal opportunity crime,” said Dixie Johnson, a partner at law firm King & Spalding who advises companies on how to avoid such situations. “But the cases we see usually have involved men doing the trading.”
Not that female romantic partners have always been innocent bystanders. In 2002, adult-movie actress Kathryn Gannon, known on screen as Marylin Star, pleaded guilty to trading on tips from an investment bank CEO with whom she was having an affair. She was sentenced to three months in prison.
A decade later, former beauty queen turned hedge-fund consultant Danielle Chiesi pleaded guilty to securities fraud for her role in a sprawling insider-trading ring. In a sentencing submission, she blamed a toxic relationship with her boss—and lover of 20 years—who urged her to get inside information.
One challenge for prosecutors is determining whether the partner who is privy to the information was in on the crime, said former federal prosecutor Brendan Quigley.
“Do they say, ‘Oh, my God, I would never give information to my spouse or significant other?’ It depends not only on what actually happened, but also on the nature of their relationship,” said Quigley, who prosecuted insider-trading cases in Manhattan.
For defense lawyers, pillow-talk cases can be difficult to handle at trial, particularly if one partner testifies against another. “To a juror, this is the bad boyfriend,” said Imperatore, the defense attorney. “He’s acting badly in a relationship in a way that goes beyond the four corners of insider trading.”
Not surprisingly, many such relationships don’t survive. Teixeira and his girlfriend split up, as did Markin and his.
Former Playboy CEO Christie Hefner and her husband, William Marovitz, divorced about a year after the SEC accused him of illegally trading Playboy stock based on information gleaned from his wife—despite her explicit instructions not to. Marovitz didn’t admit wrongdoing in a 2011 settlement.
One woman whose husband recently settled insider-trading charges involving confidential information related to her employer said coping with the allegations strengthened their bond.
“It felt like an injustice,” said the woman, who wasn’t identified in court papers. “It brought us closer together.”
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Strong family financial planning can help reduce taxes and support younger generations. From intrafamily loans and asset gifts to inheritance disclaimers, strategic cooperation can create meaningful financial benefits—when families have the trust and structure to make it work.
4 min
Happy is the family whose members—parents, grandparents and grown children—trust each other enough to cooperate on shared goals, especially financial ones. When that is truly the case, Uncle Sam’s tax rules can help as well.
This matters especially now that mortgage rates are above 7%, and many families are looking for ways to help younger members. If the elders have resources and are confident younger ones can cooperate, a family loan could make homeownership possible while providing the elders with a useful income stream.
Other strategies can actually lower taxes, such as when funding 529 plans or Roth IRAs, or when someone inherits a traditional IRA with required withdrawals larger than they will need.
Here are three strategies useful for functional families.
It is perfectly legal for families to lend money to a relative for a down payment or even a private mortgage.
But it is important not to cut corners, says Ryan McKeown, a CPA with Modern Wealth Enhancement in Minnesota. If the loan is for a down payment, be honest with the mortgage provider and have a formal agreement. The lender owes tax on the interest payments received.
If the loan is for a private mortgage, both sides should have legal representation with a formal written agreement, including payment terms. The lender owes tax on the interest, and the borrower often can deduct it if he or she itemizes.
To avoid IRS trouble, the interest rate shouldn’t be lower than the agency’s Applicable Federal Rate at the time of the loan. Currently that is about 5% for loans longer than nine years; about 4.5% for loans three to nine years; and about 4% for loans three years or less. Currently, traditional mortgage rates are generally above 7%.
In addition, the lender could use the $19,000 annual gift-tax exemption (described below) to forgive some or all of the interest or principal annually. If both lenders and borrowers are married, that is up to $76,000 a year. There is no tax for the borrower on such forgiveness, because it is from a gift.
If you’re going this route, McKeown advises against having a fixed plan to forgive the debt. Instead, do it in one-off letters specifying the amount—and keep careful records. Otherwise the IRS might try to treat the loan as a taxable gift.
Powerful tax-saving moves for families often use gift-tax provisions. Under current law, anyone can give anyone else up to $19,000 of assets annually, free of gift tax. That means a married couple with three grandchildren could give them a total of $114,000 in 2026.
The gifts can be cash or other assets, like stock. For noncash gifts, the cost basis—which is the starting point for measuring taxable gain after a sale—“carries over” to the recipient. So if someone buys $1,000 of stock and gives it away when it is worth $5,000, the recipient’s cost basis is $1,000. If the recipient later sells the shares for $8,000, the taxable gain is $7,000.
Here’s an example showing how gifts could save a family taxes. Grandma is a widow of modest means, while her child and spouse have prospered. The couple has two children, and they want to contribute $5,000 to a 529 college-savings plan for each—but they need to sell stock to do it. Their tax rate on the sale would be 18.8%, and they would need to sell about $11,000 of stock.
However, Grandma’s federal tax rate on the stock sale is 0%. If the couple gives $10,000 of shares to Grandma, she could sell them, pay no tax, and fund the grandchildren’s 529 plans. This saves about $1,000 of tax.
These moves are legal, and they could be used in other ways, such as to help a young person fund a Roth IRA.
But trust among family members is essential: Under the law, givers can’t put conditions on a gift. Grandma could use her stock proceeds to take a cruise, but she makes 529 contributions instead.
Mark Sellner, a retired tax attorney and CPA living in Sarasota, Fla., uses this strategy. His children sell stock he gives them and fund 529 plans for his grandchildren.
The family’s tax savings aren’t huge, but he likes other benefits. The sales by his children don’t boost his adjusted gross income, which in turn could raise his Medicare Irmaa premiums or his 3.8% surtax on net investment income.
Sellner doesn’t worry about his children using the funds for another purpose.
“There can’t be any strings attached to gifts. Of course, it is up to us to decide whether to make them in the future,” he says.
Two caveats: The “kiddie tax” applies to most children under age 24, and it is levied at the parents’ rate on investment income above $2,700 in 2026. Consider this before making gifts to a young person.
Investors who give away stock also forgo the step-up, an important provision that exempts assets held at death from capital-gains tax.
Sellner knows he’s losing a step-up, but says, “The children could use a little more now. Why should they wait 20 years to get it?”
A disclaimer is a highly useful strategy in which one heir renounces an inheritance in favor of another heir. Assuming family members cooperate, this can save taxes.
Here’s one example. Dad died and had a large traditional IRA that he left to Mom. She has enough assets and income to cover her expenses, and she lives in a state with a stiff estate tax. The inherited IRA would put her estate over the threshold.
Also surviving are three young-adult children. If Mom disclaims all or part of Dad’s IRA within nine months of his death, that amount could go directly to the children. They will have 10 years to empty the account, and the family as a whole will likely save estate and income taxes.
Disclaimers have many key details, especially regarding beneficiary documents. Although heirs have great freedom in choosing what assets to disclaim, the rules about who gets disclaimed property are rigid. It is best if the original owner names tiers of heirs so that if one disclaims, the next recipient is clear.
