(Corrects to fix last name of lawyer Marjorie Peerce in last
By Joseph Ax
NEW YORK, June 30 A U.S. judge has vacated the
conviction of a former Merrill Lynch administrative assistant
who lied to a grand jury under pressure from her boss but then
helped convict six former brokers and traders of generating
illegal profits with information they overheard on a "squawk
Judge Leo Glasser of U.S. District Court in Brooklyn took
the extraordinarily rare step of vacating the guilty plea of
Irene Santiago, who admitted in 2005 to testifying falsely
before a grand jury and agreed to cooperate with government
Santiago's testimony helped convict the six men but their
convictions were overturned on appeal. Prosecutors later agreed
to drop the charges against them if they met certain conditions.
In a ruling released on Friday, Glasser said it would be an
injustice to leave Santiago with a conviction after the six
defendants had their records scrubbed clean and their rights
In 2009, thanks in part to Santiago's assistance,
prosecutors convicted six former brokers and traders accused of
listening in on pending orders from customers over squawk boxes
between 2002 and 2004. Prosecutors said the six used the
information to trade ahead of those transactions, a practice
known as "front running."
The defendants were Kenneth Mahaffy, formerly of Merrill,
now part of Bank of America Corp ; David Ghysels,
formerly of Lehman Brothers Holdings Inc; Timothy O'Connell,
formerly of Merrill; and Keevin Leonard, Robert Malin and Linus
Nwaigwe, all formerly of the now-defunct broker-dealer A.B.
Santiago primarily worked as an assistant to O'Connell. When
government investigators sought to interview her as part of
their probe, O'Connell persuaded her to lie to the grand jury,
telling her he would "lose everything" and that he might "do
something stupid," Glasser said in Friday's ruling.
In 2010, Glasser sentenced Santiago to a $10 fine, wondering
aloud why prosecutors had indicted her given the pressure
O'Connell put on her and the cooperation she provided.
Two years later, the 2nd Circuit U.S. Court of Appeals
vacated the six men's convictions, ruling that prosecutors
withheld key evidence and that jurors had been inadequately
Last year, prosecutors said they had reached deferred
prosecution agreements with the six defendants, permitting the
charges to be dropped if they stayed out of legal trouble for a
period of time. Lawyers for several of the defendants said at
the time they were pleased to put the case behind them.
In vacating the conviction, Glasser said it would be unfair
to make Santiago a "real-life Hester Prynne, condemned to wear
her scarlet letter of conviction for life."
A spokesman for Brooklyn U.S. Attorney Loretta Lynch said
the office was "reviewing Judge Glasser's decision."
In an interview, Santiago's lawyer, Marjorie Peerce, said,
"Irene Santiago is pleased to have her name back and not be
labeled a felon. The past nine years have been very difficult
(Reporting by Joseph Ax; Editing by Noeleen Walder)