Trader Pleads Guilty to Insider Trading Charges
NEW YORK (AP) _ A fifth person pleaded guilty Wednesday in an insider trading scheme that involved theft of secret information from a prominent Wall Street law firm.
The U.S. Attorney’s Office in Manhattan said Michael Borlinghaus, 45, of Middletown, N.J., pleaded guilty to charges of obstruction of justice and lying to the Securities and Exchange Commission.
Borlinghaus, who has been in custody since his March 8 arrest, faces a maximum 10 years in prison and fines that could exceed $1.4 million. His sentencing is scheduled for Sept. 13.
Assistant U.S. Attorney David Meister, who prosecuted the case, said Borlinghaus was part of a ring that shared and traded on confidential information stolen from the law firm Skadden, Arps, Slate, Meagher & Flom.
Borlinghaus received the stolen information from the law firm through a chain of people who shared various personal and professional relationships, Meister said. A former paralegal at Skadden, Christopher Garvey, is charged with stealing the information, which eventually made its way to Borlinghaus, prosecutors said.
Borlinghaus is charged with using inside information to trade in stock options concerning a pending stock tender offer for Norton Co., a maker of braces and industrial ceramics and chemicals. He used an account in Europe, so to avoid detection, and shared the $400,000 in trading profits with other participants in the scheme, prosecutors said.
Borlinghaus is charged with lying to SEC investigators in September 1992 about the trading. The U.S. Attorney’s Office said other guilty pleas in the case include:
-Garvey, one count of conspiracy, sentencing scheduled Aug. 18.
-Darrin Gleeman, one count each of conspiracy and wire fraud. Sentencing scheduled Aug. 18.
-Seymour Gleeman, one count each of conspiracy and obstruction of justice; two counts of wire fraud; no sentencing date scheduled.
-Edwin Karger, one count of involving an insider trading conspiracy. Sentencing scheduled Sept. 23.