NEW YORK, June 4 (Reuters) - A lawyer who worked for some of
the country's most prestigious firms was sentenced on Monday to
a record 12 years jail for an insider trading scheme which
lasted 17 years and netted more than $37 million between 1994
Matthew Kluger's sentence is the longest ever handed down in
an insider trading case and is one year longer than the 11-year
jail term imposed last year on Galleon Group hedge fund founder
Raj Rajaratnam for insider trading charges.
Kluger was sentenced by U.S. District Judge Katharine Hayden
of Newark federal court. Hayden also sentenced stock trader
Garrett Bauer to nine years jail for his role in the scheme, and
a third person, Kenneth Robinson, is scheduled to be sentenced
"The severe sentences imposed today are a warning to anyone
trying to game the financial markets for their own enrichment,"
said New Jersey U.S. Attorney Paul Fishman in a statement.
An attorney for Kluger said he planned to appeal against the
sentence. "It is unduly harsh and fails to reflect that Mister
Kluger received only a fraction of the proceeds from the
offense," said attorney Alan Zegas.
An attorney for Bauer did not return a call seeking comment.
Federal prosecutors and securities regulators accused the
trio of trading on inside information ahead of at least 11
The three men used merger secrets gathered by Kluger while
he worked as a corporate attorney for prominent law firms,
including Cravath Swaine & Moore; Skadden, Arps, Slate, Meagher
& Flom; and Wilson Sonsini Goodrich & Rosati.
In one instance, Kluger tipped Robinson on Oracle Corp's
impending acquisition of Sun Microsystems Inc in 2009. In
another, the trio traded ahead of Intel Corp's takeover of
McAfee Inc in 2010.
Bauer kept the majority of the proceeds, using some of the
profits to buy a $6.65 million condominium on Manhattan's Upper
East Side and an $875,000 home in Boca Raton, Florida.
Robinson acted as a middleman between Kluger and Bauer in an
elaborate scheme that involved the use of public payphones and
prepaid disposable cell phones in an attempt to hide their
activities from law enforcement. Prosecutors said the men netted
more than $37 million between 1994 and 2011.
The three men have agreed to pay back their ill-gotten gains
plus interest. Bauer agreed to pay $31.6 million, Kluger will
pay $516,000 and Robinson settled for $845,000, an amount
regulators said reflected his willingness to aid authorities.
Both Bauer and Kluger pleaded guilty in December to one
count each of conspiracy to commit securities fraud, conspiracy
to commit money laundering and obstruction of justice. Robinson
pleaded guilty in April 2011 to one count of conspiracy to
commit securities fraud and two counts of securities fraud.
The case is United States v. Bauer et al, U.S. District
Court, District of New Jersey, No. 11-03536.
(Reporting by Joseph Ax and Andrew Longstreth)
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