A lawyer who worked at some of the country’s most prestigious law firms has received the longest-ever prison term for insider trading.
Yesterday, U.S. District Judge Katharine Hayden sentenced lawyer Matthew Kluger to a record 12 years in jail for a $37 million insider-trading scheme that lasted 17 years. Kluger’s sentence is one year longer than the 11-year term that Galleon Group’s Raj Rajaratnam currently is serving for the same offense.
In a statement, New Jersey U.S. Attorney Paul Fishman said Kluger’s harsh sentence is “a warning to anyone trying to game the financial markets for their own enrichment.”
In December, Kluger pleaded guilty to gathering secrets about pending mergers and acquisitions concerning such companies as Oracle Corp., Sun Microsystems Inc., 3Com Corp. and Acxiom Corp. while working as a corporate attorney for Cravath Swaine & Moore; Skadden, Arps, Slate, Meagher & Flom; Fried, Frank, Harris, Shriver & Jacobson; and Wilson Sonsini Goorich & Rosati.
Judge Hayden also sentenced stock trader Garrett Bauer to nine years in prison yesterday for his role in the scheme. Mortgage broker Kenneth Robinson, who also was involved in the scam, is scheduled to be sentenced today.
The three conspirators have agreed to pay back their illicit proceeds plus interest.
Kluger’s record sentence reflects the government’s tougher stance against corporate criminals. In October 2011, the Wall Street Journal reported that New York federal courts have sentenced insider-trading criminals to a median of 2 ½ years in prison during the past two years. The term is more than double the median sentence courts issued from 1993 to 1999.
Alan Zegas, Kluger’s attorney, says he plans to appeal the judge’s ruling, calling it “unduly harsh.”
Read Thomson Reuters and Bloomberg for more information about Kluger’s scam and sentencing.
For more InsideCounsel stories about insider trading, read:
Gupta’s lawyer suggests others leaked info on P&G
Ex-Yahoo executive, fund manager plead guilty to insider trading
Prosecutors crack down on “criminal club” insider-trading scheme
SEC charges Ameriprise financial adviser with insider trading
4 men plead not guilty in Dell insider trading case
6-month prison sentence served to ex-lawyer for insider trading
