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Two of “Yuppie Five” Inside Traders Sentenced

March 3, 1987

WHITE PLAINS, N.Y. (AP) _ A stockbroker who pleaded guilty to insider trading charges has been sentenced to a two-month jail term while his client faces three years on probation.

U.S. District Judge Gerard Goettel imposed $25,000 fines Monday on Morton Shapiro, 25, the broker, and Daniel Silverman, 24, the client, both of Manhattan, and ordered Silverman to complete 200 hours of community service.

The defendants are members of the ″Yuppie Five,″ a group of young men who have pleaded guilty to participating in an insider trading scheme.

Of the four professionals who have been sentenced in the case, Shapiro, who had worked at the investment firm Moseley, Hallgarten, Estabrook & Weeden, was the first to receive a prison term because he profited from the scheme, according to Goettel.

All five admitted they traded on non-public, material information on corporate takeovers misappropriated from the law firm of Paul, Weiss, Rifkind, Wharton & Garrison by Michael David, a former associate at the firm.

David, who pleaded guilty to mail fraud, conspiracy and security fraud, was scheduled to be sentenced next month.

The sentencing of Shapiro and Silverman comes just a little more than a week after Goettel handed down a two-year prison term and $365,000 fine to Dennis Levine, 34, a former managing director at Drexel Burnham Lambert Inc., whose information led authorities to Ivan Boesky, considered Wall Street’s leading speculator.

Boesky, who has agreed to plead guilty to an unspecified criminal charge, has agreed to pay a $100 million fine.

The ″Yuppie Five″ case, unrelated to the scandal involving Levine and Boesky, was given that name because all the defendants were in their 20s and most held high-paying, promising jobs in some of New York’s most competitive professions.

In sentencing Shapiro, Goettel noted that unlike Shapiro, the other two defendants, Robert Salsbury, a former securities analyst for Drexel Burnham Lambert, and Andrew Solomon, a former arbitrage analyst at Marcus Schloss & Co., did not receive money from the insider information.

Shapiro had an interest in $140,000 in illegal trading profit that was to have been divided among Shapiro, Silverman and David.

Shapiro was also expected to pay a $34,000 fine to the Securities and Exchange Commission and pay a civil penalty.

Silverman was expected to pay a $50,000 settlement to the SEC, which was still being worked out.

Goettel said Silverman, of Cranston, R.I., was ″somewhat less culpable than Shapiro″ because Silverman was an investor, not a securities dealer.

Salsbury received three years probation and was ordered to perform 600 hours of community service while Solomon was sentenced to one year probation, 250 hours of community service and was fined $10,000.

Shapiro, who pleaded guilty to perjury before the SEC and conspiracy to commit mail fraud, could have received up to 10 years in jail while Silverman, who pleaded guilty to one count of conspiracy to commit securities fraud could have received up to 5 years in prison.

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