Lawyer Paid $32K for M&A Tips Gets 3 Years for Conduit Role in High-Profile Insider-Trading Scheme
Posted Aug 19, 2011 06:23 pm CDT
A New York personal injury lawyer was sentenced today to a three-year federal prison term for serving as a conduit for at least two attorney tipsters then working at Ropes & Gray in a high-profile insider-trading scheme.
Jason Goldfarb was paid $32,500 for his work in the illegal stock-trading scheme, in which he tipped a trader for the Galleon Group hedge fund. Goldfarb was fined $32,500 and will be required to make restitution for over $1 million, representing the amount of profits others made from his tips, reports the Associated Press.
Raj Rajaratnam, a co-founder of the Galleon Group hedge fund, was convicted earlier this year.
Prosecutors had sought a prison term for Goldfarb at the high end of a recommended range of 37 to 45 months, reports Bloomberg.
“Goldfarb’s crimes were particularly egregious because of his status as an attorney,” the government said in a sentencing memo filed last week in the Manhattan case. “While working as an attorney obligated to protect client confidences, Goldfarb engaged in a scheme to misappropriate information protected by the attorney-client privilege in order to enrich himself.”
The two former Ropes & Gray attorneys, Arthur Cutillo and Brien Santarlas, who gave Goldfarb tips about pending deal information they gleaned from their work at the law firm, already pleaded guilty in the case.
The firm had no knowledge of their insider trading at the time and cooperated with prosecutors when it came to light.
Additional and related coverage:
ABAJournal.com: “Former Ropes & Gray Lawyer gets 30 Months for Insider Trading”
ABAJournal.com: Lawyer Who Took Plea Delivers on Stand, Helps Convict Goffer, 2 Others in Insider-Trading Case/”
ABAJournal.com: “Rajaratnam’s Conviction Points Way Toward New Focus on Aggressive, High-Tech Securities Probes”
ABAJournal.com: “Report: BigLaw Attorney in Insider-Trade Case Didn’t Open Firm Docs, Allegedly Just Used Title Info”