Friday, 25 July 2014
Last updated 18 hours ago
Nov 4 2008 | 1:32am ET
A former UBS executive has been sentenced to six-and-a-half-years in prison for running an insider-trading scheme involving several hedge funds.
Michael Guttenberg pleaded guilty earlier this year to conspiracy and securities fraud. Prosecutors alleged, and the judge ruled, that he started the scheme “to give inside information to others to use illegally.” Authorities have called the scam one of the biggest insider-trading cases on Wall Street since the 1980s.
In 2001, Guttenberg, who worked in UBS’ equity research department and had just been named to its investment review committee, offered a friend insider tips in exchange for his forgetting about a $25,000 debt. The friend took the deal, and made millions for himself and a pair of hedge funds he ran, over the next six years. Guttenberg later made similar arrangements with others, including another hedge fund manager.
Guttenberg and a dozen others were arrested in March 2007. Among those collared were hedge fund managers David Tavdy and Erik Franklin, whose Jasper Capital and Chelsea Capital earned $10 million and $7.5 million in ill-gotten gains from the tips.
Both Tavdy and Franklin have pleaded guilty and await sentencing.
Guttenberg’s lawyers had pushed for a reduced sentence, arguing that he was a “broker man” and that “the punishment in real life terms… has been severe.” U.S. District Judge Deborah Batts also ordered him to forfeit $15.8 million.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…