NEW YORK (Reuters) - Zvi Goffer, a former securities trader known as “Octopussy” because of his many sources of information, was sentenced to 10 years in prison on Wednesday for insider trading.
Winifred Jiau, a consultant convicted in a separate insider trading case, was sentenced hours later by a different judge to four years.
The two cases stemmed from a wide-ranging government probe of insider trading by hedge funds and traders, noted for the use of FBI wiretaps, which also led to the conviction of Galleon Group founder Raj Rajaratnam.
U.S. District Judge Richard Sullivan, sentencing Goffer, said the former trader forfeited any claim to leniency by choosing to go to trial rather than admitting his crimes, as many of his co-defendants in the investigation elected to do.
“You gambled and you lost,” Sullivan told Goffer, 34, who was convicted in June of trading on inside information about pending mergers.
The judge also renewed a call to Wall Street to heed the message that insider trading can carry a stiff sentence.
“Insider trading is very, very hard to detect and because of that has to be dealt with harshly,” he said.
Speaking at his sentencing, Goffer apologized tearfully to regular investors, who lacked his unfair advantage, and to his family. He was ordered to pay $10 million in forfeiture and must turn himself in for prison on October 21.
Prosecutors called Goffer, who once worked at Rajaratnam’s Galleon Group hedge fund firm, the ringleader of a scheme to trade on tips about pending takeovers of computer network equipment maker 3Com Corp and Canadian drug company Axcan Pharma Inc. His nickname, “Octopussy,” came from a character in the 1983 James Bond movie of the same name.
A dual Israeli-U.S. citizen, Goffer was convicted along with his brother Emanuel Goffer and a third trader, Michael Kimelman. Both are scheduled to be sentenced next month.
In a different courtroom, a tearful Jiau was sentenced by U.S. District Judge Jed Rakoff, who has overseen the government’s case against so-called expert network firms, which match business experts with hedge funds.
Taiwan-born Jiau, 43, was paid $208,000 over two years for by expert network firm Primary Global Research (PGR) for information about technology firms, according to evidence presented at her trial. She was the first consultant for firms such as PGR to go to trial on insider-trading charges.
Experts said Goffer’s sentence could mean a long term for Rajaratnam, the biggest target of the government’s probe of insider trading by hedge funds.
“It will make Rajaratnam’s lawyers worried,” said Lawrence Lustberg, a partner at Gibbons. Rajaratnam’s attorneys “are going to have to explain how Goffer’s sentence does not demand a very long sentence in Rajaratnam’s case.”
Federal prosecutors have asked for a sentence of between 19-1/2 years and 24-1/2 years, for Rajaratnam, reflecting nonbinding federal sentencing guidelines.
Rajaratnam’s sentencing, which had been set for September 27, was postponed to October 13, according to a filing on Wednesday in the court handling his case. No reason for the postponement was given. The office of the U.S. Attorney in Manhattan declined to comment. A spokeswoman for Rajaratnam had no immediate comment.