(Reuters) - A hedge fund manager from a prominent Denver family was sentenced in New York to one year and one day in prison on Wednesday after pleading guilty to insider trading charges.
Drew “Bo” Brownstein, who controlled Big 5 Asset Management LLC, admitted in October to making nearly $2.5 million in profit by trading in April 2010 on a friend’s tip about Apache Corp’s (APA.N) forthcoming takeover of Mariner Energy Inc.
Prosecutors said the tip about the $2.7 billion purchase came from Drew Peterson, whose father Clayton sat on Mariner’s board.
“The boardroom should be where investors’ interests are protected, not a money trough for tippees of the wealthy and connected,” U.S. Attorney Preet Bharara said in a statement. “We hope the message is finally getting through -- that any financial advantage gained from illegal trading will be fleeting and it will not be worth the cost.”
Brownstein had pleaded guilty to one count of securities fraud. He was sentenced by U.S. District Judge Robert Patterson in Manhattan, who ordered him also to forfeit $2.45 million and pay a $7,500 fine.
The defendant’s plea agreement had called for a prison term of about three to four years, a court filing shows. Probation officials recommended six months in prison, while Brownstein’s lawyers asked for probation, another filing shows.
Gary Naftalis, a lawyer for Brownstein, did not immediately respond to a request for comment.
The Petersons have also pleaded guilty in the case. Clayton Peterson was sentenced to two years of probation and a $400,000 fine. Drew Peterson is scheduled to be sentenced on April 11.
Brownstein’s father Norm Brownstein is a well-known Denver lawyer and lobbyist active in Democratic politics.
The case is not related to the broader federal crackdown on insider trading that has since 2009 resulted in several dozen guilty pleas and convictions, and an 11-year prison term for Galleon Group hedge fund founder Raj Rajaratnam.
The case is U.S. v Peterson et al, U.S. District Court, Southern District of New York, No. 11-00665.
Reporting by Jonathan Stempel in New York; Editing by Tim Dobbyn