Posted Jun 05, 2012 11:33 am CDT
A former associate who admitted giving confidential deal information to a stock trader has been sentenced to 12 years in prison, the longest-ever sentence in an insider trading case.
Matthew Kluger, 51, was sentenced Monday, report the Wall Street Journal (sub. req.), the Am Law Daily and the Associated Press. His sentence is longer than the 11 years meted out to hedge fund founder Raj Rajaratnam, sentenced in November for insider trading.
Kluger was accused of passing along information in a scheme that produced more than $37 million in profits over a 17-year-period. He worked at four law firms during that time: Wilson Sonsini Goodrich & Rosati; Cravath Swaine & Moore; Skadden, Arps, Slate, Meagher & Flom; and Fried, Frank, Harris, Shriver & Jacobson. None of the law firms was accused of any misconduct.
Kluger’s lawyer, Alan Zegas, told the Wall Street Journal the sentence is “unduly harsh” and he plans to appeal. In court, Zegas has argued that Kluger was unaware of the scope of the scheme and deserved a lighter sentence, the Am Law Daily says. Zegas said Kluger and two co-defendants had a deal to split trading proceeds equally, and Kluger would have stopped providing information if he had known of the extent of the stock purchases.
Another defendant, former trader Garrett Bauer, received a nine-year sentence on Monday. A third defendant, the middleman in the scheme, has yet to be sentenced. Kluger and the two co-defendants agreed in April to pay $33 million to settle a civil case filed by the U.S. Securities and Exchange Commission.