Appeals court won't reverse three insider trading cases

Mon Jul 1, 2013 1:10pm EDT
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By Nate Raymond

NEW YORK (Reuters) - Three former Wall Street traders who were charged in a broad crackdown on insider trading by the U.S. government lost their bids to reverse their convictions and sentences on Monday.

The 2nd U.S. Circuit Court of Appeals in New York upheld the 2011 convictions and sentences of traders including Zvi Goffer, once dubbed "Octopussy" after the James Bond film thanks to his various sources of information.

The ruling allows to stand the 10-year sentence handed to Goffer, 36, a former trader at Schottenfeld Group. Goffer's sentence was the third-longest U.S. sentence for insider trading.

"Goffer's corrosive influence on the integrity of the financial markets and on the expectation of trust and confidence between attorney and client required a significant punishment," U.S. Circuit Judge Richard Wesley wrote.

The two other traders who lost their appeals were Craig Drimal, 57, and Michael Kimelman, 42. While the court upheld Goffer's sentence, it said an order requiring him to forfeit more than $10 million be recalculated.

Monday's decision marked the latest victory for federal prosecutors in Manhattan in a sweeping insider trading probe that has led to charges against 81 people since October 2009.

The 2nd Circuit last week also upheld the 2011 insider trading conviction of Galleon Group hedge fund founder Raj Rajaratnam, who is serving an 11-year sentence.

Prosecutors said Goffer, who briefly worked at Galleon, acted as ringleader of a conspiracy to trade on tips ahead of takeover announcements involving companies including 3Com Corp and Axcan Pharma Inc.   Continued...

Zvi Goffer, who was convicted by a jury of conspiracy and securities fraud crimes in connection with his participation in an insider trading ring comprised of Wall Street professionals and attorneys, leaves the U.S. District Court following his sentencing in New York September 21, 2011. REUTERS/Andrew Kelly