NEW YORK (Reuters) - A former lawyer who was one of the prime suppliers of corporate secrets to traders in an insider trading ring, was sentenced to six months imprisonment on Wednesday.
Brien Santarlas once worked for the well-known law firm Ropes & Gray and he immediately decided to cooperate with a government investigation when FBI agents approached him in early November 2009, his lawyer said in Manhattan federal court.
Prosecutors said Santarlas’ cooperation was crucial to the case that led to the June 13 conviction at trial of three traders on securities fraud and conspiracy charges, part of a crackdown on insider trading at hedge funds. Dozens, like Santarlas, have pleaded guilty in the sweeping prosecution notable for its use of wiretaps.
U.S. District Judge Richard Sullivan, while praising Santarlas for “doing the right thing” in cooperating and testifying for the government, said his crimes were particularly serious because he was a lawyer who broke a code of ethics and breached the trust of his firm.
Santarlas, 34, pleaded guilty in December 2009.
Sullivan sentenced Santarlas to six months imprisonment, two years supervised release and ordered him to forfeit $32,500, the amount he was paid by a trader for inside information about merger activity involving the law firm’s clients in 2007.
“It does send the message that you don’t get a pass on this,” the judge told Santarlas, who apologized for his crime.
The names of Santarlas and his former law firm colleague, Arthur Cutillo, featured prominently at a trial that heard how they were paid by trader Zvi Goffer for secrets about computer network equipment maker 3Com Corp and Canadian drug company Axcan Pharma Inc.
“I made a profound mistake when I engaged in insider trading,” Santarlas said at his sentencing proceeding on Wednesday.
He accepted full responsibility, saying: “I did this. I broke the law. I violated my oath as an attorney.”
Sullivan sentenced Goffer to 10 years and Cutillo to 2-1/2 years.
Goffer once worked for the Galleon Group hedge fund, whose founder, Raj Rajaratnam, was also found guilty on insider trading charges after a separate high-profile trial that ended in mid-May. Rajaratnam was sentenced to 11 years imprisonment by a different judge.
The case is USA v Goffer et al, U.S. District Court for the Southern District of New York, No. 10-00056.
Reporting by Grant McCool; editing by Andre Grenon