A former hedge fund manager and convicted insider trader will have to wait a little longer to find out just how long he’ll spend in prison.
Mark Lenowitz, who has been cooperating with authorities since he pleaded guilty more than two years ago, will be sentenced next month. He faces up to 25 years in prison for securities fraud and conspiracy, although federal guidelines suggest he’ll get more like four to six years, unless the sentencing judge is generous in considering his cooperation.
Lenowitz was originally scheduled to be sentenced tomorrow.
At the time of Lenowitz’s plea, prosecutors called his the largest insider-trading case in 20 years, ensnaring 13 people, The New York Times reports. That has since been overtaken by the insider-trading case involving Galleon Group founder Raj Rajartnam.
Lenowitz’s case was among the first insider-trading probes in which authorities won the cooperation of hedge fund managers. The case involved no fewer than three hedge funds, two of which Lenowitz had a hand in.
According to authorities, beginning in 2001, Michael Guttenberg of UBS’ equity research department began passing tips to a friend, Erik Franklin. Franklin, in turn, traded on that inside information, both at Lyford Cay Capital, a hedge fund for Bear Stearns executives, and Chelsey Capital, where Lenowitz worked.
Franklin and Lenowitz would go on to found another hedge fund, Q Capital Investment Partners, in 2003, continuing to trade on the tips they got from Guttenberg. Lenowitz allegedly made some $100,000 in the scam; Franklin allegedly netted $5 million.
Lenowitz’s cooperation with prosecutors was revealed in a 2007 letter his lawyer wrote to the judge in the case. The letter, which was originally sealed, has recently become available without explanation, the Times reports.
All of the other 12 defendants in the case have pleaded guilty and been sentenced. None received more than six-and-a-half years; most got probation.