Confessions of an Insider Trader

Every dawn in the early spring of 2011, Matthew Kluger peered out a window of his home in Oakton, Va., wondering when federal agents would knock at his door. Kluger, a mergers-and-acquisitions lawyer, says he worried that authorities were closing in on him as the source of illegal tips in a three-man insider-trading ring that eluded detection for 17 years.

The knock came on April 6. U.S. agents handcuffed Kluger, hustled him into a Dodge Intrepid, and drove to the Federal Bureau of Investigation office in Manassas, Va. The evidence against him included recordings of him telling the man he tipped to get rid of a cell phone that could lead back to him, and to do it carefully because authorities use phone-sniffing dogs. “I really would like to see this phone go bye-bye ASAP,” Kluger said, adding: “Do you want this to be our undoing?”