© The Financial Times Ltd 2016 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
September 21, 2011 11:57 pm
Zvi Goffer, the former Galleon Group trader dubbed “Octopussy” for his connections to inside information, was sentenced to 10 years in prison for insider trading.
US Judge Richard Sullivan said it was a “tragic day” as he handed down one of the longest insider trading sentences in recent memory. “Anything less than that would send the wrong message,” he said, according to Bloomberg. He also ordered Mr Goffer to forfeit $10m.
Mr Goffer, who was convicted of 14 counts of conspiracy and securities fraud in June, was the centre of an alleged scheme that involved his brother, two attorneys from Ropes & Gray and others who swapped confidential information about pending takeover deals to reap more than $20m in profits. The trading ring overlapped with the scheme run by Raj Rajaratnam, the convicted founder of Galleon Group.
Mr Rajaratnam is scheduled to be sentenced on October 13 for his trading scheme, which netted him more than $63m in profits. His sentence was set for next Tuesday but was delayed without any explanation. Prosecutors are seeking 19 to 24½ years in prison.
The 10-year sentence for Mr Goffer is among the longest handed down for insider trading. Former Credit Suisse banker Hafiz Muhammad Zubair Naseem was sentenced to 10 years in prison after his 2008 conviction on charges that he led a $7.8m insider trading scheme.
Prosecutors have sought stiff prison terms for the recent cast of insider trading defendants but so far judges have issued sentences below the maximum time sought by the government. Prosecutors argued Mr Goffer should face between 10 and 12½ years in prison.
On Wednesday, Judge Jed Rakoff rejected the government’s six and a half year to eight year sentencing recommendation for Winifred Jiau, the convicted former consultant to Primary Global Research, a California expert network firm. Judge Rakoff issued a four-year sentence.
Other hedge fund traders, lawyers, and consultants convicted in the recent sweep on Wall Street have received sentences ranging from six months to five and half years in prison.
Danielle Chiesi, a tough-talking former Bear Stearns trader who was a centerpiece of Mr Rajaratnam’s trial, was sentenced to 30 months in prison. She is expected to report to prison next month.
Craig Drimal, a former trader who allegedly received tips from Mr Zoffer, received five and a half years in prison. Jason Goldfarb, a lawyer who passed along the tips, received three years. Robert Moffat, the former IBM executive who pleaded guilty to providing Ms Chiesi with inside information, received a six-month sentence.
Preet Bharara, the US attorney in Manhattan whose office has brought these insider trading cases, testified before the US sentencing commission for stiffer sentences. He said the guidelines may be letting some defendants off with lighter sentences than they deserve. US sentencing guidelines are influenced by the size of the alleged fraud. Mr Bharara advocated that the guidelines should capture traders who make no profits or lose money on trades.
Copyright The Financial Times Limited 2016. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.