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Critics of the AI build-out are picking the wrong fight when they attack data centers for their water use. But they are right when they say the digital economy is getting thirstier and the tech industry should answer for it.

The whole AI supply chain is water intensive, and reducing use in one place can increase it elsewhere. New research shows chip factories and power plants use considerably more water than data centers. Other industries are also more water intensive than AI, though tech is where consumption is increasing the most.

Previous generations of data centers used a lot of water, so it was logical to fear that today’s giant facilities, which generate huge amounts of heat, would suck up large amounts of water for cooling. But hyperscale AI data centers have shifted to more efficient systems that recirculate water or other liquids in closed loops of tubes and pipes. These systems can reduce freshwater consumption at data centers 50% to 70%.

That means, for example, that the first phase of Microsoft’s massive Fairwater data center complex in Wisconsin only needs about four Olympic swimming pools of water annually. That’s half the annual usage of a car wash, according to the Milwaukee 7 Regional Partnership, an economic development organization. It’s only 0.1% of the water Foxconn, the manufacturer that had planned to use the site to make liquid crystal displays, would have been permitted to draw, Microsoft President Brad Smith said at the campus opening.

Data centers can reduce the water they use by eliminating evaporation-based cooling. But this often entails a trade-off: Electricity-hungry equipment has effectively replaced water as the means to keep data centers cool. That moves more of the problem to the electric grid, which uses large amounts of water to cool its power plants.

AI’s power consumption per square foot is quickly growing to as much as 10 times that of traditional cloud-computing. And that gap could rise to 100 times given the power density of the megawatt (1,000-kilowatt) racks Nvidia is designing for the future, well above the 10 to 20 KW racks typical before AI.

Water technology company Xylem and research firm Global Water Intelligence looked at water use across AI’s supply chain, from AI chip foundries to data centers to the portion of power plants allocated to their use. Their January report demonstrates that the water toll of AI is far greater at semiconductor factories and the power plants electrifying chipmaking and computing than at the data centers themselves.

Overall, AI-associated water use will more than double by 2050 from the 6.26 trillion gallons a year withdrawn in 2025, Xylem says. Where we draw water from also matters: 40% of the world’s data centers today are in “areas of high or extremely high water stress,” said the report. And 29% of global chip factories are in “extremely water-stressed areas.”

Interpreting all of this requires a hefty dose of context. The industrial world uses 168.8 trillion gallons of water annually, and this new digital economy—which increasingly helps all other industries operate—comprises just 3.7% of that, said the Xylem report.

Power generation is also getting less water intensive. Coal uses the most water, but it is being phased out. Natural gas, which powers most data centers, is less water intensive. As the power mix pivots to renewables, the water intensity of power generation could fall dramatically.

Another crucial distinction is water consumption versus temporary use: Power plants that use water for cooling return more than 90% of it back to the water system. It may be warmer and it may need treatment to avoid harming ecosystems, but it’s not irrevocably consumed.

Though chip factories use a larger proportion of ultrapure water that they don’t return, they do also return water to the ecosystem. Water technology firm Ecolab, which says wastewater reuse can be as low as 5%, helped a U.S. chip factory save nearly 11 million gallons through improved monitoring and automation.

Increasingly, data center operators are starting to speak up about their water use. “There’s this ongoing narrative that AI is taking all the water. We use, like, zero water,” Chase Lochmiller, CEO of AI infrastructure developer Crusoe, told a Stanford University class last month in a recorded guest lecture. Still, his industry talks a lot less about water used to make power and chips.

Data centers are also getting disproportionate attention relative to everyday water use by agriculture, manufacturing and even lawn care. U.S. golf courses use 531 billion gallons of water a year, and that’s after improving their water efficiency 31% since 2005. U.S. data centers used roughly 17 billion gallons on site in 2023, according to Lawrence Berkeley National Laboratory. Industrial-scale dairy farms, including growing animal feed, are among the most water-intensive operations in agriculture. Critics of dairy farms’ environmental footprint say AI doesn’t come close to that impact.

Still, there’s no doubt we need to find more water as AI grows. A new University of Texas study of AI’s growing water needs in the state found that water withdrawals could rise from 0.75% of demand in 2025 to between 3% and 9% by 2040, depending on how many data centers get built.

The place to find water is obvious-–around 30% of the world’s water is currently lost from public utility networks due to leaks and theft. The water utilities in charge of fixing that issue are typically among the most cash-starved of municipal institutions.

Tech companies are stepping in to provide money and technology. Microsoft is partnering with communities where it is active in Phoenix and Las Vegas to install high-tech water leak detection systems. The technology, which comes from FIDO Tech, runs data captured by sensors through AI to isolate leaks so they can be repaired.

Without that technology, water utilities need to upgrade whole sections of their networks, which can be too costly—so the leaks continue. “At the end of [the] day,” said Al Cho, Xylem’s chief strategy and external affairs officer, “water security is an information problem.”

While Microsoft has given up tens of billions of dollars in potential payments, it gained some important certainty in the April deal. OpenAI agreed to pay Microsoft a portion of its revenue until 2030. Previously those payments would have continued until OpenAI reached artificial general intelligence, and some Microsoft executives were worried that it could hit that milestone at any time. In addition, Microsoft got the rights to continue to resell OpenAI’s tech through 2032, regardless of when AGI was declared.

It’s not all roses for OpenAI, however. In the short term, the renegotiated revenue-sharing agreement will likely hurt its free cash flow. That’s because under the prior agreement, it had the option to defer some of its payments to Microsoft to 2032, according to the person. (Its earlier financial projections showed it expected to pay Microsoft about 5% to 12% of its revenue each year through 2030.)

Now OpenAI can no longer defer the payments, which means it should pay about $6 billion of its projected $30 billion in revenue to Microsoft this year, rather than the nearly $4 billion it projected early this year.

OpenAI earlier this year forecast burning $25 billion this year and $57 billion next year. Now that it no longer can defer revenue payments, that cash burn could increase to roughly $27 billion this year and about $63 billion next, according to The Information’s analysis of its forecasts. These forecasts, however, don’t include any revenue gains from recently announced commercial deals.

The payment cap came about as OpenAI and Microsoft tweaked their partnership so OpenAI could sell more of its products through Amazon and other cloud providers, which could increase revenue.

The company says it received inquiries related to mergers and acquisitions after it made efforts to expand into the defense and aerospace industries

GoPro GPRO -3.65%decrease; red down pointing triangle is reviewing a possible sale or merger after receiving multiple unsolicited inquiries.

The wearable camera maker said Monday it received inquiries related to mergers and acquisitions after it made efforts to expand into the defense and aerospace industries.

Shares gained 10% to $1.45 in after-hours trading.

GoPro’s board has since engaged a financial adviser to help conduct a strategic review, which will evaluate various options including a possible sale or merger.

The company engaged defense consulting firm Oliver Wyman in April. They are helping to assess potential new market segments for GoPro, as well as strategies for diving into the imaging and unmanned industries.

“Q1 and the weeks since have been a pivotal period for GoPro,” Chief Executive Nicholas Woodman said. “Our exploration of defense, aerospace and strategic M&A opportunities reflects our belief that there is significant unrealized value in GoPro’s technology, IP and brand.”

Woodman, who owns a large chunk of voting shares, told analysts during Monday’s earnings call that he was supportive of the strategic review.

GoPro separately recorded a wider loss and a drop in sales during the first quarter.

For the first quarter, the company posted a loss of $80.8 million, or 50 cents a share, compared with $46.7 million, or 30 cents a share, a year earlier. Stripping out certain one-time items, the adjusted per-share loss was 35 cents.

Revenue slid 26% to $99.1 million. Sales from GoPro’s retail channel fell 35%. Subscription and service revenue was roughly flat, while the number of subscribers fell 8%.

GoPro withdrew its guidance and said it won’t provide an outlook while conducting the strategic review.

In April, GoPro shared plans to cut 23% of its workforce as part of a restructuring strategy to reduce costs. Macroeconomic challenges, including high memory costs and tariffs, continue to weigh on the company.

The shake-up of cradle-to-grave care is lowering government spending, spurring innovation and stirring fears about those left behind

STOCKHOLM, Sweden—This paragon of collectivism is pivoting toward rugged individualism.

For decades, Sweden was shorthand for the brand of high-tax, high-spend government that managed people’s lives from cradle to grave through state-run hospitals, schools and care homes.

No longer. With little fanfare, this Nordic country of 11 million has embraced capitalism.

Today, nearly half of primary healthcare clinics are privately owned, many by private-equity firms. One in three public high schools is privately run, up from 20% in 2011. School operators are listed on the stock exchange.

Sweden’s experience has lessons—good and bad—for other rich countries, including the U.S., where New York City Mayor Zohran Mamdani is looking to emulate parts of the state-centric model such as universal child care and city-run stores.

The capitalist makeover has allowed Sweden to do what few industrialized countries have managed in recent years: shrink the size of the state. That has enabled the government to sharply lower taxes and, economists say, sparked a surge in entrepreneurship and economic growth.

Its total public social spending bill—which includes healthcare, education and all welfare payments—has fallen to 24% of gross domestic product, similar to the U.S. and well below the over 30% for nations like France and Italy.

Sweden’s economy is expected to grow by around 2% a year through 2030, roughly the same pace as the U.S. and double the growth rates of France and Germany, according to an April forecast by the International Monetary Fund.

“Sweden is a real land of opportunity,” said Elisabeth Svantesson, the country’s finance minister. “I want people and capital to stay here and grow.”

While many European countries are raising taxes, Svantesson has cut them three years in a row. Sweden’s top income-tax rate has fallen close to 50% from nearly 90% in the 1980s.

Considering the overall tax burden, “it’s more attractive here…than the U.S.,” said Conni Jonsson, the billionaire founder of EQT, a Stockholm-based private-equity firm.

Critics say the paring back has gone too far. Inequality is soaring in this traditionally egalitarian country. Gang violence has surged in dozens of immigrant-heavy suburbs, creating areas where local criminal networks challenge state authority and hinder policing. A public debate is raging over for-profit schools, which critics say make money by skimping on playgrounds, libraries and staff.

“The American perspective of Sweden is so far off from reality,” said Andreas Cervenka, a Swedish author who recently returned home after living in California. “We are going from a society which is like, ‘One for all, all for one,’ to ‘Everybody is on their own.’”

Spurring entrepreneurs

Sweden didn’t always have a big public sector. The country climbed from being one of the poorest to the third-richest country in Europe over 100 years through 1970 without high levels of taxation.

But starting in the 1960s, the center-left Social Democratic Party—which dominated the country’s postwar politics—sharply raised taxes and spending, ultimately taking government spending as high as 70% of GDP by the 1990s.

The changes triggered a long period of weak growth, stagnant after-tax incomes and ballooning budget deficits and debt that culminated in a banking crisis in the early ’90s.

Under pressure from investors, the government instituted sweeping economic reforms over the next two decades. They included cuts to unemployment benefits and housing subsidies and the privatization of public services, as well as tax cuts and a reform of the pension system to make it more affordable. Strict limits were imposed on government debt. (Sweden’s debt to GDP is a meager 36%, compared with 129% for the U.S.) In the mid-2000s, the government eliminated wealth and inheritance taxes.

The result: Wealthy entrepreneurs who had fled Sweden’s high taxes have been returning, said Jacob Wallenberg, a member of the Swedish industrial dynasty that owns big stakes in Ericsson, Saab and other large companies.

When Wallenberg was growing up in the 1960s and ’70s, Swedes weren’t very wealthy, he said. The country, he noted, famously only had one Rolls-Royce car.

Today, international polling suggests Swedes are far more open to wealth than the French, Germans, Spanish or Italians, and more positive about the market economy than any European country except Poland. Sweden’s Rolls-Royce count is now over 800, and when the automaker decided to open its first showroom in Scandinavia in 2016, it chose Stockholm.

As the state retreated, the private sector expanded. A study published in April by the Stockholm School of Economics found that after Sweden removed inheritance and gift taxes in 2005, private firms with potential family successors grew faster, invested more and paid higher corporate taxes than firms without natural heirs.

Businesses championed new technologies in a bout of risk-taking with few equivalents in a region dominated by older industries and ambivalent about tech.

Niklas Zennström, the billionaire founder of internet-telecommunications pioneer Skype, said the privatizations helped fuel innovation in sectors like telecoms, which have underpinned the country’s tech boom. Zennström himself started his career building fiber-optic networks for a private telecom operator in the 1990s.

“Sweden was very early with mobile phones, with a high penetration of 3G and competition in mobile networks,” Zennström said. “There was a sense of entrepreneurship.”

The country saw more than 500 initial public offerings over the 10 years through 2024, more than Germany, France, the Netherlands and Spain combined, according to a landmark 2024 report on Europe’s economy by former European Central Bank President Mario Draghi. It has now moved ahead of the U.S. in the number of billionaires per capita, thanks to a thriving tech startup scene and videogame industry that has produced hits like Minecraft and Candy Crush.

‘More for less’

At St. Göran’s hospital in downtown Stockholm, radiologist Karin Dembrower huddled over a computer screen, pointing to tiny light spots indicating cancer on a black-and-white image.

“We cannot see with our eyes that there is something going on here but somehow the AI is seeing” it, she said.

For nearly three years, Dembrower has pioneered the use of artificial intelligence at the hospital to spot breast cancer. The AI is so quick and accurate at detecting cases among the 80,000 women who get screened here a year that waiting lists at Dembrower’s radiology department have shrunk dramatically.

She and her colleagues have stopped working evening and weekend shifts. They have more time to run advanced diagnostics for women who’ve been diagnosed with cancer. St. Göran’s now regularly receives referrals from overcrowded hospitals with no AI.

Like all Swedish hospitals, St. Göran’s is publicly funded. But it is owned by a private hospital operator, Capio, and its chief executive trained at McKinsey and talks about KPIs and the Toyota model of lean management.

That mentality is one reason St. Göran’s rolls out productivity-enhancing tools like AI far faster than its state-run rivals.

“We do more for less,” says CEO Gustaf Storm. He estimates it costs 15%-20% more at public Swedish hospitals to treat conditions such as appendicitis than at his hospital.

Aida Hadžialić, a center-left politician who leads the Stockholm region government that is responsible for healthcare, is a fan. She says St. Göran’s is more efficient at producing good outcomes for patients, with lower reimbursements, than the public system.

Private competition has had broad benefits across the industry. At a time when aging populations are costing governments around the industrialized world more money every year, healthcare spending per capita in Sweden grew around 1% a year on average between 2014 and 2024 after adjusting for inflation—roughly half the pace in the U.K. and a third of the pace in the U.S., according to the Organization for Economic Cooperation and Development.

At St. Göran’s, staff brandishing iPad minis closely track patient data while digital systems monitor costs. Patients’ vitals are automatically uploaded into a central system. A traffic-light system helps staff prioritize cases.

The hospital has been testing an AI-based patient-observation system that alerts staff when elderly patients are at risk of falling out of bed, which leads to longer hospital stays.

The changes are even more pronounced in primary care: Nearly half of doctors’ offices are now private, and tech upstarts are disrupting the sector. Critics say it’s also disrupting care, with a concentration of private doctors in wealthier urban areas, where patients are often cheaper to serve, leaving state-run facilities with more complex, expensive cases in poorer or rural areas. That, in turn, has fueled worries about a brain drain.

For many patients, the ease of tech-enhanced visits has been a boon.

When Ben Cooper, a Brit living in Stockholm, needed to check in with a doctor about his asthma recently, he didn’t leave home. Instead, he video-called the physician through an app on his cellphone.

The app, built by local company Kry, was launched in 2015 and now has more users in Sweden than Netflix. Virtual appointments are available 24/7, and doctors speak foreign languages, including Arabic.

“You open the app, put in your symptoms, they give you a choice of appointments. Never once have I experienced that the doctor has been late,” said Cooper, contrasting the service’s punctuality with frequent delays in the U.K.’s state-run National Health Service.

Private ownership creates efficiencies that allow Kry to save money and serve more patients, said Kalle Conneryd Lundgren, a physician who is Kry’s CEO.

Digital appointments tend to be shorter, saving time for both patient and doctor. The company recently started preparing medical notes and other health certificates using AI, which has reduced administrative time by 40% in the past year, he said.

Physicians can suggest other improvements to the app, which has resulted in changes such as a chat function performing certain checkups, said Bjorn Stridh, a physician who works at one of the company’s clinics inside an upmarket shopping mall. The waiting room resembles a premium spa, with wooden chairs and an espresso machine.

Kry’s list of registered patients is growing at 10% a year, Lundgren said. The company is also expanding fast in other European markets like France, where it has over a million visits a year.

Winners and losers

Sweden’s transformation has many winners, mainly middle-class families who own their homes and have benefited from rising incomes and surging house prices, said Elinor Odeberg of Arena Idé, a progressive think tank in Stockholm.

The transformation also has losers: renters outside big cities, where there are fewer new jobs and shrinking public services, and urban, low-income migrant communities that have historically been more dependent on the state.

The share of Swedes aged 20 to 27 living at home with their parents—traditionally among the lowest in Europe—rose to 26% in 2023 from 15% in 1995 as housing costs increased, said Ola Palmgren, president of the national tenants’ association.

With less income redistribution, local governments in Malmö and elsewhere are being squeezed as central government funding has fallen, making it harder to deliver public services like education, said Malmö Mayor Katrin Stjernfeldt Jammeh.

Public infrastructure investments, meanwhile, have been low over the past two decades, leading to delays and patchy service in the train network, with poorer Swedes feeling the bigger pinch.

“They took away resources from sectors that were supposed to protect the society,” said Jonsson, the private-equity entrepreneur. “But of course for the dynamism in the economy it has been good.”

Stefan Fölster, an economist and former Finance Ministry official, argues that the vast majority of Swedes have benefited from the reforms. Households’ inflation-adjusted incomes have doubled on average since the 1990s, after stagnating during the 1970s and ’80s under high taxation, Fölster noted.

Even so, the government is responding to concerns. In November, parliament voted to replace a longstanding requirement to maintain a state surplus with a new balanced-budget rule, allowing the state to loosen its purse strings. The government is also pushing through reforms aimed at tightening rules to run a school for profit so that only long-term, high-quality operators remain.

“It was right to move in the privatization direction,” said Lars Calmfors, a prominent economist and longtime adviser to the Finance Ministry who helped shape the country’s economic reforms. “But we probably overdid it.”

School grind

Perhaps nothing highlights the promise and peril of privatization more than education, where Sweden’s embrace of the market goes even further than the U.S.

The country has increasingly allowed public schools to be run by either nonprofits or for-profit companies. Roughly one in 10 teenagers now attends a secondary school operated by AcadeMedia, which is listed on the Stockholm stock exchange.

These schools receive public funds based on enrollment, but what they do with that money is largely up to them. They must follow the national curriculum, and their students take the same national exams as public-school students.

In the southern city of Malmö, Bryggeriets high school is operated as a nonprofit after an initiative by the local skateboarding association. Every student gets a MacBook Air—an upgrade from the midrange laptops given to most Swedish high-schoolers—and lunch is free at a cafeteria perched above a cavernous indoor skate park. There are two teachers per class, compared with the standard one teacher per 25-30 students.

Principal Marie Svensson, who changes lightbulbs herself, said she saves money on maintenance and administration to invest in more teachers, art exhibitions and equipment like film cameras. The school rents cheap space inside a former brewery for its 191 students.

“It’s kind of free here, you get to explore,” says John Wiforsen, a student who travels two hours each way to get to the school from central Sweden. Some Danish students cross over the bridge from Copenhagen every day.

Private direction allows for nimble decision-making. When funding for public schools was cut recently, Bryggeriets stabilized its finances by quickly taking in more students and dividing two classes into three. That same decision would have taken up to a year in the state system, said Svensson, who previously worked in public schools.

While nonprofit schools like Bryggeriets can work, Malmö Mayor Stjernfeldt Jammeh and others worry for-profit schools have incentives to cut corners because they are set up to make a profit. “These operators earn money by dividing pupils into different groups,” she said.

Privately run schools are far better at recruiting the best students and wealthiest families. That leaves poorer kids with more dysfunctional public schools, which have higher costs because they are dealing with students with greater needs and a growing percentage of children of immigrants whose first language might not be Swedish.

Bryggeriets is less than a mile from one of Sweden’s most notorious housing projects, Rosengård, where soccer star Zlatan Ibrahimović grew up. Principal Svensson said few children from Rosengård attend the school because their parents tend to prefer a more conservative approach.

Sweden has recently fallen down international education rankings, a shift that proponents of free schools attribute to high levels of immigration. Private-school critics argue that when you cluster the high-performing students in one school and the struggling ones in another, the overall national average suffers.

Underscoring the country’s new psyche, school choice is now deeply entrenched in Sweden, with broad backing among parents and within both the current center-right government and center-left opposition Social Democratic Party.

But ahead of September’s general election, fractures over for-profit schools—and societal shifts—are surfacing, and are expected to play a large role in campaigns. The Social Democrats are promising a ban on school profits. The party is also calling for higher investments in public services and social welfare and criticizing past tax cuts for the wealthy.

“The system works well for some people,” said Åsa Plesner, a former school administrator. “It’s really a break from Swedish universalism.”

A job-hopping lawyer accessed files and recruited lawyers at elite firms to tip traders about pending deals, prosecutors say

A lawyer, Nicolo Nourafchan, was arrested and charged with securities fraud for an insider-trading scheme spanning a decade.

Nourafchan allegedly provided tips on over a dozen undisclosed mergers and acquisitions, recruiting lawyers from other elite firms.

The scheme involved 29 other defendants and generated millions in trading gains from deals involving major companies.

Someone kept making winning trades just before big acquisitions that were being handled by the same Boston law firm. Authorities initially thought it was another case of foreign hackers stealing valuable information from a U.S. law firm.

But hackers weren’t swiping secrets. Investigators discovered it was an inside job.

After closely analyzing the deals and other information, Federal Bureau of Investigation agents traced the well-timed tips back to a single lawyer: Nicolo Nourafchan, who worked at the Boston-based firm, Goodwin Procter.

Nourafchan had a lucrative side hustle providing traders around the world with illicit tips about coming buyouts over a decade, according to federal prosecutors. He also recruited M&A lawyers at other elite firms, Wachtell Lipton and Weil Gotshal, to dish on their deals, prosecutors say.

The case marks one of the most brazen insider-trading schemes in years, ensnaring several of Wall Street’s biggest M&A advisory firms and multibillion-dollar deals that they worked on for clients including Amazon.com, Johnson & Johnson and Burger King. The participants celebrated their windfalls—which ranged from $2,000 to $3 million—by exchanging memes of “making it rain” dollar bills, the court filings show.

Nourafchan, 43 years old, was arrested last week and charged with securities fraud. The case involves 29 other defendants, including his brother and college friends. Prosecutors say the Yale Law School graduate provided tips about more than a dozen undisclosed mergers and acquisitions.

Nourafchan hasn’t entered a plea and didn’t return messages seeking comment. His lawyer declined to comment. Nine defendants earlier pleaded guilty and are cooperating with prosecutors.

Despite his Ivy League pedigree, Nourafchan was a midlevel deal lawyer who hopped among prestigious firms. He got his start at Sidley Austin and spent a few years at Latham & Watkins before he was let go in 2021. Goodwin terminated him in August 2023 after he hadn’t worked on a billable matter for months.

His main reason for showing up at the office, according to court records and people familiar with the matter, was to sift through computer systems to uncover pending deals that he could sell to an ever-growing ring of traders in Florida, New York, Russia and Israel. He even tried to get hired at a public-relations firm that worked on mergers after he left his last law-firm role, hoping to scoop up more tips there, prosecutors said.

“Listen, the fact of the matter is he’s done this forever, so, like, he’s hurting,” one of his contacts told a trader by phone when Nourafchan had trouble finding a new job.

The alleged conspirators compensated Nourafchan with kickbacks from tens of millions of dollars in trading gains, prosecutors say. For example, a few weeks after traders made nearly $90,000 in profits on his insider tip about an Amazon acquisition in 2020, Nourafchan received a $9,765 wire transfer, the court papers show. “Just went through. Thank you bro!,” he replied.

Even the co-conspirators marveled at how good their informant was at getting M&A scoops, according to the indictment. “It’s amazing how he just only works in these types of firms,” a Florida insurance adjuster who allegedly acted as Nourafchan’s connection to the traders, said on a phone call cited in the indictment. “I mean it’s the only reason why he did that type of law.”

“Genius,” a trader replied.

Attorneys at large law firms and public companies routinely handle undisclosed earnings releases or proposed mergers, information that could form the basis for illegal insider trading. Many go through extensive training focused on not misusing client information for personal profit or leaving sensitive information in places where it could be overheard or picked up.

But some have run afoul of their duties. Gene Levoff, a former senior lawyer at Apple, pleaded guilty in 2022 to trading on inside information about Apple’s quarterly performance and was sentenced to four years of probation.

Law firms have also been victims of overseas hackers who illegally accessed internal emails that told them about unannounced deals. Chinese hackers took such information from Cravath Swaine & Moore and Weil Gotshal a decade ago.

Goodwin, Nourafchan’s latest employer, said it was “disappointed that a former employee is alleged to have violated the trust placed in him and misused confidential information as part of a broader criminal scheme affecting multiple law firms and their clients.” The firm said it had cooperated with the Boston U.S. Attorney’s Office and the Securities and Exchange Commission, which filed parallel criminal and civil cases.

Latham said Nourafchan hasn’t been “associated with the firm for five years, and the conduct as alleged would reflect a serious violation of our robust policies and procedures.”

Nourafchan and a college classmate, Robert Yadgarov, didn’t trade stocks themselves. Instead, over a decade, the indictment says they used Nourafchan’s tips and funneled them to far-flung traders, including a hair stylist in Santa Monica, Calif., as well as several people in Russia and Israel. The broad network distanced Nourafchan and Yadgarov from the trading, the people familiar with the investigation said.

Yadgarov, who runs his own personal-injury firm in New York, hasn’t made a plea in court. Mark Lesko, his lawyer, said Yadgarov would plead not guilty. “We intend to vigorously defend Robert in this case,” Lesko said.

Nourafchan, Yadgarov and other alleged participants were friends from their undergraduate days at George Washington University. Nourafchan, who attended high school in Los Angeles, was active in a campus group organized around Chabad, a Hasidic Jewish organization, according to a 2015 article in Washingtonian magazine.

After George Washington, Nourafchan went to Yale Law School, where he graduated in 2011, the same class that produced former San Francisco District Attorney Chesa Boudin and lawyers who took on high-profile roles on Wall Street and in the Justice Department. One of the attorneys he allegedly recruited to his scheme, Avi Sutton, graduated from Yale two years after Nourafchan did.

At Yale, Nourafchan wrote articles critical of China’s foreign policy and the role of American corporations in Saudi Arabia. Nourafchan passed the New York bar in 2012 and joined the New York office of Sidley Austin the following year.

The insider-trading ring started relatively small. Nourafchan got information about a healthcare deal and the $1.8 billion buyout of an adtech company and shared it with a trader in Russia, according to the indictment.

Nourafchan and Yadgarov recruited Sutton, who worked at another big firm, Wachtell Lipton, to give them tips about some of his firm’s coming deals, prosecutors say, including the potential acquisition of Canadian coffee and doughnut chain Tim Hortons.

Burger King agreed to buy Tim Hortons for $11 billion in 2014. The Tim Hortons trade also was routed to the Russian trader, who bought the shares in the name of a shell company registered in the British Virgin Islands, according to court papers.

Sutton, who was recently the general counsel of investment bank LionTree, didn’t respond to requests for comment and hasn’t been charged. A Wachtell spokeswoman said “the responsible party left Wachtell Lipton over four years ago. There are no allegations of wrongdoing against the firm.”

Nourafchan left Sidley Austin around 2017 and joined Latham & Watkins, another Wall Street law firm with a sizable roster of merger clients. Around the same time, he and Yadgarov recruited a college classmate, Gabriel Gershowitz, to funnel them more tips.

Gershowitz worked then at Weil Gotshal and told the group about a $2.5 billion transaction that involved Ardagh, a metal and glass packaging company. Gershowitz was charged in January 2025 and has cooperated with prosecutors. Several defendants cooperating with prosecutors were charged the prior month.

Prosecutors have recommended Gershowitz serve two years in prison. He is set to be sentenced in November, according to court records. A lawyer for Gershowitz declined to comment.

Weil Gotshal said it was among the victims of the alleged scheme and that it cooperated with prosecutors. “The former employee who misused confidential information as part of a large-scale insider trading scheme has not been associated with the firm for over six years and the transaction involved dates back to 2019,” it said.

Nourafchan didn’t last long at Latham and was told in July 2020 that he would have to depart the following month. A day before his last day, Nourafchan accessed Latham’s systems to learn about J&J’s $6.5 billion offer to buy Momenta Pharmaceuticals, prosecutors say.

He provided the information to his Florida middleman, who gave the tip to a doctor in Florida whose brothers also traded on the tips, as did some of the brothers’ co-workers, according to the indictment.

The group tried to disguise their trading intentions in their text messages, according to prosecutors. Trying to tell Nourafchan that he had lost his trading connection, one of the ring members said his “laborers” had messed up the job. “I’m going to focus on finding a new construction crew and then we’ll be building skyscrapers,” the unnamed participant said.

Nourafchan landed at Goodwin, the Boston-based firm, after leaving Latham. The firm had a large roster of private-equity clients that bought software and healthcare companies, many of them publicly traded.

The alleged schemers were sometimes impatient. In June 2022, Nourafchan got confidential information from Goodwin’s systems about Amazon’s plan to acquire iRobot and shared it with his Florida middleman, according to court papers. As days passed, traders who bet on the deal worried the tip might be bad because Amazon didn’t announce a purchase of the maker of robot vacuums.

This time, the group referred to waiting on a “rabbi” who needed “surgery.” “We needed that damn rebbe already,” one trader wrote. When the trader didn’t get a definitive response about when the deal would happen, he replied: “At this point I might just start learning the Koran.”

Nourafchan also tipped his brother, Lorenzo, to the iRobot news, which opened the door to a separate network of traders who were less careful with the tips. Lorenzo Nourafchan recruited his hair stylist to do the trading, who in turn involved the owner of an insurance agency and nearly a dozen of his friends or relatives, according to the court papers.

Lorenzo Nourafchan hasn’t entered a plea and didn’t immediately respond to requests for comment.

The alleged schemers made more than $1.7 million in trading profits after Amazon announced its $1.7 billion deal for iRobot in August 2022, the court papers show, and some of the traders asked for more tips. “Because I want money,” one of them texted. “You told me before that there was another one coming.”

By early 2024, authorities had caught wind of the scheme. In March, an undercover agent contacted one of the participants to ask about the iRobot deal and other trades, pretending to be a securities regulator. The participant quickly contacted the Florida middleman, according to a transcript included in the indictment.

“I just got a terrible call…we might need a meeting,” the trader said.

“Shut up,” the middleman replied, and asked what the call was about.

“About some trades in iRobot and Momentive and some other things that were. Yeah a whole bunch of acquisitions,” the trader said.

The middleman responded: “Holy s—. That is the most nauseating thing I have ever heard.”