US Jury Convicts 3 in Insider Trading Case

Posted June 13th, 2011 at 12:45 pm (UTC-5)
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A U.S. federal jury has convicted three Wall Street traders of fraud as part of a government crackdown on insider trading in the hedge fund industry.

The jury in New York’s Manhattan district announced the guilty verdicts Monday in the cases of former Galleon trader Zvi Goffer, his brother Emanuel and Michael Kimelman.

The three men were convicted of conspiracy and securities fraud. Their trial is the second to result from a federal investigation of insider trading involving the Galleon Group of hedge funds.

The founder of Galleon, Raj Rajaratnam, was convicted last month in the same court of directing the insider trading scheme.

Prosecutors said the Goffer brothers and Kimelman bribed two lawyers for information about pending corporate acquisitions and used it to make millions of dollars in illegal profits. The prosecutors based their case partly on recordings of wiretapped phone calls involving the defendants.

The three men insisted they based their trades only on public information. They remain free on bail pending sentencing hearings in September and October.

Two lawyers who were accused of providing the tips to the traders have pleaded guilty to fraud charges.