The second trial to result from a massive investigation into insider trading at hedge funds ended Monday with the conviction of a trio of Wall Street traders on charges they paid hefty bribes to coax confidential information out of shady lawyers. A jury reached the verdict against stock trader Zvi Goffer and two others in federal court in Manhattan after deliberating five days since June 2.
It came less than a month after the conviction of Raj Rajaratnam, the one-time billionaire who founded the Galleon Group of hedge funds and Goffer's former boss. Goffer, his brother Emanuel and Michael Kimelman were convicted of conspiracy to break securities laws. They had insisted they based trades only on public information. Sentencing was set for September 23 for Kimelman and October 7 for the Goffer brothers. All three were permitted to remain free on bail pending sentencing.
As in the Rajaratnam trial, the government relied on a vast trove of taped conversations to try to prove Zvi Goffer had engineered a plot to pay the two attorneys nearly $100,000 in 2007 and 2008 for the inside tips on mergers and acquisitions that generated millions of dollars in illegal profits.
The Securities and Exchange Commission had said Goffer who worked for Rajaratnam for nine months before starting his own firm was nicknamed "the Octopussy" because of his reputation for reaching for information from multiple sources. Prosecutors have called the Galleon probe the biggest ever into inside trading in the hedge fund industry. They say the case also marked the first extensive use of wiretaps in an insider trading case.
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