Tipster sentenced in NYC insider trading case

AP News
Posted: Nov 30, 2011 6:14 PM
Tipster sentenced in NYC insider trading case

A Manhattan lawyer was sentenced to six months behind bars and two years of probation Wednesday after telling a judge he made a "profound mistake" by providing inside tips on confidential Wall Street deals.

Brien Santarlas, 34, was charged in what federal prosecutors have billed as one of the largest insider trading cases in history.

"I made a profound mistake when I engaged in insider trading," Santarlas said. "I'm ashamed. I'm embarrassed. I'm humiliated. ... It's something I'll never forgive myself for."

When first confronted by the FBI in 2009, Santarlas immediately agreed to wear a wire to record conversations with another corrupt lawyer in his firm _ a decision the defense argued had earned him a probation-only sentence.

U.S. District Judge Richard Sullivan agreed Santarlas deserved credit for his cooperation, saying it spared him a three-year term. But the judge said he needed to imprison the lawyer a short time to send the message to others in the same position, "You don't get a pass."

As part of a plea deal, Santarlas testified earlier this year at the trial of two stock-trading brothers and a lawyer who were convicted securities fraud.

Santarlas, while an attorney at the corporate firm Ropes & Gray, agreed to join the insider-trading scheme after he spoke with a lawyer friend who knew a stock trader willing to pay cash for tips about mergers and acquisitions, he said.

"While we were making good money, it seemed like nothing compared to the money on Wall Street," he told jurors.

Santarlas testified that he agreed to steal secrets about public companies by rummaging through the computer files of other lawyers at his firm. He got $25,000 in cash after his first big tip about the acquisition of a technology company in September 2007.

He said he was given a pre-paid cellphone to pass along tips. Once done with the phone, he was instructed to cut it in half and submerge the pieces in water before throwing them away, he said.

The same sweeping securities investigation has resulted in convictions of more than two dozen defendants. They include Raj Rajaratnam, a former one-time billionaire and prominent hedge fund manager.

Rajaratnam was sentenced to 11 years in prison.