NEW YORK, Aug 31 (Reuters) - A former trader at the Galleon
Group hedge fund was sentenced on Wednesday to five-and-a-half
years in prison, a term the judge said should serve as a
warning to Wall Street that insider trading was a serious
crime.
Craig Drimal, 55, who pleaded guilty in April, was arrested
as part of a sweeping government crackdown on insider trading
that has resulted in almost 50 guilty pleas or convictions.
At the sentencing proceeding in Manhattan federal court on
Wednesday, U.S. District Judge Richard Sullivan said he would
impose a more severe prison term than Drimal's defense had
requested to put the financial industry on notice.
"There has to be a message sent here to hedge fund managers
and traders and lawyers that this is not going to be
tolerated," Sullivan said.
Drimal must report to prison on Oct. 31 and was ordered to
pay $11 million in restitution.
Prosecutors said Drimal used to work in the offices of the
Galleon Group hedge fund, but not at the time of his November
2009 arrest. Galleon's chief, Raj Rajaratnam, was convicted in
May and is scheduled to be sentenced on Sept. 27.
When he pleaded guilty in April, Drimal told the judge
that he traded in shares of former computer network equipment
maker 3Com Corp and Canadian drug company Axcan Pharma Inc
based on illegal tips from lawyers at the law firm Ropes & Gray
working on merger transactions. Drimal pleaded guilty to
securities fraud and conspiracy charges.
In court papers, federal prosecutors said that Drimal made
around $6.5 million off the trades in 3Com and Axcan. They also
said that Drimal lied to the Securities and Exchange Commission
when he was questioned about his Axcan trades.
3Com was acquired by Hewlett-Packard Co in 2010 and Axcan
Pharma was acquired by private equity firm TPG Capital in
2008.
"I understand that I committed a crime and I deserve to pay
that price," Drimal said through tears.
The government had called for a sentence of up to seven
years. Sullivan said he had been tempted to impose a far
heavier sentence than he did had it not been for mitigating
factors raised by Drimal's attorney, JaneAnne Murray.
The case is USA v. Goffer et al, U.S. District Court,
Southern District of New York, No. 09-01184.
For Drimal: JaneAnne Murray.
For the prosecution: Andrew Fish, Reed Brodsky and Marc
Litt of the U.S. Attorney's Office.
(Reporting by Basil Katz)
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