LAWFUEL – Legal Newswire – MICHAEL J. GARCIA, the United States Attorney for the Southern District of New York, announced that EUGENE PLOTKIN,
a former Associate in the Fixed Income Research Division at
Goldman Sachs & Co., was sentenced today to 57 months in prison
for his role in an international insider trading network that
resulted in more than $6.7 million in illicit gains. The
sentence was imposed by United States District Judge RICHARD J.
HOLWELL in Manhattan federal court.
According to the Indictment and other documents previously filed in this case, as well as statements made by PLOTKIN in connection with his guilty plea: PLOTKIN ran a multi-faceted series of schemes to
unlawfully trade on inside information from a number of sources,
including STANISLAV SHPIGELMAN, an analyst at Merrill Lynch who
provided information concerning numerous Merrill Lynch corporate
deals; NICKOLAUS SHUSTER and JUAN RENTERIA, two employees of a
Wisconsin printing plant who stole advance copies of BusinessWeek
magazine and provided inside information from the magazine’s
“Inside Wall Street” column; and JASON SMITH, who, while serving
as a federal grand juror in New Jersey, provided information
about the investigation of the Bristol-Myers Squibb Company.
SHPIGELMAN, SHUSTER, SMITH, RENTERIA, and DAVID PAJCIN, another
Goldman Sachs & Co. employee who played a central role with
PLOTKIN in the insider trading schemes, have all since pleaded
guilty to insider trading charges.
Scheme to Trade on Inside Information Regarding
Merrill Lynch Merger and Acquisition Deals
PLOTKIN and PAJCIN obtained inside information from coconspirator
SHPIGELMAN, who at the time was working as an
investment banking analyst in the Mergers and Acquisitions
Division of Merrill Lynch. In exchange for cash payments and
promises of future payments based on a percentage of profits,
SHPIGELMAN provided PLOTKIN and PAJCIN with inside information
concerning approximately six different pending mergers or
acquisitions being handled by Merrill Lynch, on some of which
SHPIGELMAN had worked directly. This allowed PLOTKIN and PAJCIN,
and others with whom they shared the inside information, to
purchase securities based on knowledge of the deals prior to the
public announcement of the transactions. The defendants then
liquidated those positions after the public announcement of the
transactions, thus locking in the profits resulting from the rise
in stock prices caused by the public announcement. With respect
to the one acquisition alone — Reebok’s acquisition of Adidas —
Reebok’s common stock price increased by 30 percent from its
closing price the previous day.
Scheme to Trade on Inside Information Obtained from Pre-Publication
Access to BusinessWeek’s “Inside Wall Street” Column
At the same time PLOTKIN and PAJCIN were trading on the
Merrill Lynch deal information from SHPIGELMAN, PLOTKIN and
PAJCIN bribed SHUSTER and RENTERIA, who worked at the printing
plant where Business Week was produced, to assist in obtaining
inside information from the unpublished magazines. RENTERIA and
SHUSTER provided PLOTKIN and PAJCIN with the names of stocks
favorably mentioned in BusinessWeek’s “Inside Wall Street” column
one trading day before the column was available to the public.
As a result, PLOTKIN and PAJCIN traded in approximately 20
different stocks one day before the favorable review of those
stocks appeared in the magazine. PLOTKIN and PAJCIN then sold
the “Inside Wall Street” stocks for a profit after the column
became public, causing the prices of the stocks mentioned in the
column to rise.
Scheme to Trade on Inside Information From a Grand Juror Leaking
Details of Federal Grand Jury Investigation into Bristol-Meyers
PLOTKIN and PAJCIN also received information from
SMITH, a grand juror in New Jersey, who recounted the details of
a federal criminal investigation into the Bristol-Myers Squibb
Company. SMITH, a former employee of the United States Postal
Service, learned confidential information while serving as a
grand juror during a federal criminal investigation into
accounting fraud allegations against Bristol-Myers and several
Bristol-Myers executives. SMITH provide this information to
PLOTKIN and PAJCIN, who traded and tipped others to trade in
Bristol-Myers securities, betting that the stock price would
decline once the outcome of the grand jury investigation was
announced.
On August 28, 2007, PLOTKIN pleaded guilty to one count
of conspiring to commit insider trading and multiple counts of
insider trading, all related to these three insider trading
schemes. SHPIGELMAN and SMITH have been sentenced to 37 and 33
months in prison, respectively; SHUSTER, RENTERIA and PAJCIN
await sentencing.
In imposing sentence, Judge HOLWELL stated that the
length of the sentence was necessary, “to reflect the scope and
seriousness of the offense. This was not a simple and singular
lapse of judgement, but an egregious breach of trust, a fraud
pure and simple by a person who had no moral compass.” In
addition to the 57 months in prison, PLOTKIN was sentenced to a
$10,000 fine, and the criminal forfeiture of $6.7 million
representing the proceeds from PLOTKIN’s insider trading schemes.
Judge HOLWELL ordered that PLOTKIN surrender to begin serving his
sentence on or before March 14, 2008.
PLOTKIN, 28, resides in Rockland County, New York.
Mr. GARCIA, a member of the President’s Corporate Fraud
Task Force, praised the efforts of the Federal Bureau of
Investigation for its investigation of this matter. Mr. GARCIA
also expressed gratitude to the Securities and Exchange
Commission.
Assistant United States Attorneys HELEN V. CANTWELL and
GLEN G. McGORTY are in charge of the prosecution.
08-002 ###
