Federal appeals court upholds insider trading convictions of 3 former traders News
Federal appeals court upholds insider trading convictions of 3 former traders
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[JURIST] The US Court of Appeals for the Second Circuit [official website] on Monday affirmed [opinion, PDF] the 2011 convictions and sentences of three former Wall Street traders who were charged in a broad crackdown on insider trading which has led to charges against 81 people since October 2009. The traders Zvi Goffer, Craig Drimal and Michael Kimelman, along with non-party defendants, conducted a double-blind, high-volume insider trading network that led the participants to acquire over $10 million in profits. Kimelman, an attorney who co-founded trading firm Incremental Capital with Goffer along with brother Emanuel Goffer, received a two-and-a-half-year prison term in October 2011. Drimal, who worked for Galleon Group [JURIST news archives], was sentenced to five-and-a-half years in prison in August 2011 after pleading guilty. Goffer, who was considered the leader of the conspiracy, was sentenced to 10 years, the third-longest US sentence for insider trading [Reuters report]. Although the court upheld Goffer’s sentence, it said an order requiring him to forfeit more than $10 million be recalculated.

The Second Circuit last week also upheld [JURIST report] the 2011 insider trading conviction of Galleon’s hedge fund founder Raj Rajaratnam [JURIST news archive], who is serving an 11-year sentence. Rajaratnam’s case has been called the largest hedge fund insider trading case in US history, and his sentence is the longest term ever imposed for insider trading [DOJ press release]. The 11-year sentence was significantly lower than the 24 1/2-year sentence requested by prosecutors and less than the 19 1/2-year minimum indicated by the non-obligatory federal sentencing guidelines. Calling his crime an assault on free markets and a virus in business culture in need of eradication, Judge Richard Holwell cited Rajaratnam’s charitable financial help for victims of the tsunami in Sri Lanka, the earthquakes in Pakistan and the 9/11 attacks, as well as his impeding kidney failure due to advanced Type II diabetes as reasons for the comparatively lenient sentence. Several other defendants from leading international companies have pleaded guilty in connection with the case [JURIST report]. His younger brother, Rengan Rajaratnam, was convicted in March [JURIST report] on related charges.