New York lawyer Â Matthew Kluger was sentenced yesterday in federal court in New Jersey to 12 years in prison for insider trading. His sentence is the longest term ever imposed for that crime in the U.S.
Kruger stole undisclosed transactional information on approximately 30 deals when he was a corporate lawyer with several U.S. law firms including Cravath, Swain & Moore LLP and Skadden, Arps, Slate, Meagher & Flom LLP. The deals involved Sun Microsystems Inc., 3Com Corp. and Acxiom Corp. According to U.S. prosecutors, trades from the illegal tips generated US$37 million. Kluger tipped off a middleman who subsequently tipped New York securities trader Garrett Bauer, using disposable cellular phones to escape detection. The illegal activity spanned 17 years.
U.S. District Judge Katharine Hayden imposed a harsher sentence on Kluger because he abused his position of trust as a lawyer. Kluger pleaded guilty to conspiracy to commit money laundering, securities fraud, conspiracy to commit securities fraud, and obstruction of justice. The latter were connected to the destruction of cellular phones and computers following an FBI probe into Kluger’s affairs. Bauer and Kluger have forfeited approximately US$20 million to U.S. government agencies, a US$6.65 million condominium in Manhattan and a home in Florida.