New York, NY – A former Goldman Sachs investment banker who helped mastermind a $6.7m insider information fraud has been jailed for almost five years.
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Eugene Plotkin, who worked at Goldman in New York, was sentenced to four years and nine months in prison for his part in a insider trading ring involving tips about pending mergers and stolen copies of BusinessWeek magazine, obtained through contacts at the magazine's print works.
Plotkin, 28, who had pleaded guilty to conspiracy to commit securities fraud and to insider trading charges, was also fined $10,000 and ordered to repay the $6.7m.
He and another former Goldman employee, David Pajcin and Merrill Lynch analyst, Stanislav Shpigelman, made a major sum trading ahead of Adidas's planned bid for Reebok. [telegraph]
The sentencing of Eugene Plotkin, former Goldman Sachs analyst, to nearly five years in prison highlights the continuing crackdown by the US government on illicit insider trading.
However, legal analysts said it also served as a reminder that, while certain colourful schemes such as the one hatched by Mr Plotkin were fairly easy for the government to spot, insider trades by sophisticated Wall Street groups such as hedge funds remained much harder to uncover.
“Clearly there is a broad crackdown going on here. The government has brought several of these cases in the last year,” said David Gourevitch, a defence attorney and former prosecutor.
Mr Gourevitch noted that several of the cases were similar to the one involving Mr Plotkin in that they also involved highly unusual activity by seemingly unsophisticated traders.
Some of the trades involved in Mr Plotkin’s case were allegedly made in an account registered to a retired Croatian seamstress.
Mr Gourevitch said it was much more difficult for the government to discover insider trading among highly sophisticated investors.
“It is virtually impossible to make a case against someone who is a professional trader, hedge funds and the like,” he said. “Because they are going in and out of so many stocks every day, they are bathed in market gossip and they usually have huge amounts of information about all the things they are trading so they can explain why they did what they did.”
Mr Plotkin, a former fixed-income research associate at Goldman and one-time competitive ballroom dancer, was sentenced to 57 months in prison for his role in a scheme that prosecutors say netted more than $6.7m in illicit gains. Mr Plotkin, who pleaded guilty, allegedly received inside information from several sources, including an analyst at Merrill Lynch and a grand juror in New Jersey who prosecutors said supplied tips about a government investigation into Bristol-Myers Squibb, the drugs company.
Prosecutors said Mr Plotkin also tried to enlist strippers to glean information from investment bankers about pending merger deals.
Other alleged co-conspirators included two employees of a printing plant who the government said stole advance copies of BusinessWeek magazine and provided information from the Inside Wall Street column. Another former Goldman employee, David Pajcin, has pleaded guilty, as have other alleged co-conspirators.
The scheme, hatched in a Russian day spa, was said by the government to include illegal trades on pending deals, including Adidas’s acquisition of Reebok International in 2006.