Insider trader may face 39 months in prison

Fri Nov 6, 2009 2:41pm EST
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By Pav Jordan

TORONTO (Reuters) - A Canadian judge said on Friday he's likely to sentence a man who pleaded guilty to a series of illegal insider trades stretching back to 1994 to 39 months in prison and impose penalties that would leave him penniless.

His remarks came during a hearing in which defense lawyers and prosecutes submitted a joint recommendation for sentencing in one of the biggest Canadian insider trading cases ever.

Their submission would require Stan Grmovsek, who ran the scheme with his best friend, to pay nearly $1.5 million to the U.S. Securities and Exchange Commission and C$1.28 million ($1.2 million) to the Ontario Securities Commission, Canada's major securities regulator.

"It is my intention to impose that sentence," Toronto Judge Robert Bigelow told a small courtroom after hearing arguments from the defense and prosecution. Bigelow will announce his decision on sentencing in early January.

Grmovsek may have to serve even more jail time depending on the sentence and conditions that a U.S. court imposes on him at a later date.

Grmovsek pleaded guilty last week, admitting to three counts of insider trading for a scam that ran 14 years and netted a total of about C$10 million. Grmovsek and his partner, Gil Cornblum, traded on confidential information on 46 deals, some of them major mergers and acquisitions.

Cornblum, a law-school buddy who was best man at Grmovsek's wedding, jumped to his death from a Toronto highway bridge last week. It was his third attempt at suicide.

"I hazard to guess we will not see an insider trading case of this magnitude again," said John Corelli, deputy director of the Crown Law Office, criminal division, at Ontario's Ministry of the Attorney General.   Continued...