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July 2, 2013
Second Circuit finds (lengthy?) insider trading sentences reasonableAs reported in this Bloomberg News report, "Zvi Goffer, a former Galleon Group LLC trader, failed to win a reduction of his 10-year prison sentence for passing illegal tips and recruiting members for an insider-trading scheme." Here is more about the sentencing aspects of a lengthy Second Circuit opinion in a combined group of appeals:
The sentences of Goffer and co-conspirator Craig Drimal, and the conviction of co-conspirator Michael Kimelman were upheld today by the U.S. Court of Appeals in Manhattan. The court said a $10 million forfeiture order against Goffer should be reduced based on a change in how such rulings are calculated.
“Defendants’ sentences were reasonable in light of the magnitude of their theft,” the court said.
Drimal was sentenced to 5-1/2 years in prison after pleading guilty to five counts of securities fraud and conspiracy to commit those offenses. Kimelman, who was convicted at trial of two counts of securities fraud and conspiracy, was sentenced to 30 months.
Goffer, convicted of two conspiracy counts and 12 counts of securities fraud, was accused of recruiting members of the scheme and asking participants to use prepaid cellular phones to communicate their tips. “Goffer’s corrosive influence on the integrity of the financial markets and on the expectation of trust and confidence between attorney and client required a significant punishment,” the appeals court said.
The full Second Circuit panel opinion in US v. Goffer is available at this link, and the extended sentencing discussion starts at page 34. I particularly enjoyed this point made by the panel in its final footnote:
Contrary to Drimal’s assertions on appeal, the district court did not reveal a vendetta against the rich when it noted that Drimal did not have compelling reasons to warp the financial markets. Instead, Judge Sullivan recognized the same moral principles that make Jean Valjean more sympathetic than Gordon Gekko.
July 2, 2013 at 09:46 AM | Permalink
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As someone outside the loop from criminal sentencing, these sentences do seem reasonable. One thing that is not discussion is whether these people are banned from the securities industry. Was there a lifetime ban imposed here. Due to the seriousness of these crimes and how this is a fundamental breach of trust should they be prohibited for life?
Posted by: Steven J Fromm | Jul 4, 2013 9:47:17 AM