Ex-Lawyer Gets a Year and a Day in Prison for Insider Trading
NEW YORK (AP) _ A federal judge on Friday sentenced Ilan K. Reich to a year and a day in prison for insider trading, saying the former Wall Street lawyer symbolized ″the sickness of our society.″
U.S. District Judge Robert Sweet also placed Reich on five years’ probation for his part in the Dennis Levine insider trading scandal.
He could have sentenced Reich to a maximum prison term of 10 years and $101,000 in fines.
Sweet called Reich, a former partner at the prominent New York law firm of Wachtell, Lipton, Rosen & Katz, ″one of the brightest and the best″ but added ″unfortunately the sentence involves all of us, and the strength of laws of our society.″
Reich, 32, of Manhattan, was indicted last October on one count each of securities fraud and mail fraud. He pleaded guilty to both charges a few days later.
Reich admitted with passing insider information on pending corporate transactions to Levine, the central figure in a ring of Wall Street professionals who swapped confidential corporate information for their own gain.
Federal law forbids corporate executives, investment bankers and others with access to non-public information from using it to trade in securities.
Levine, who federal prosecutors say made more than $12 million in illegal profits by trading on insider information, has pleaded guilty to four criminal counts and is awaiting sentencing.
Last week former investment banker David Brown was sentenced to 30 days to be served on weekends and last November Ira Sokolow, another investment banker, was sentenced to a year and day, for their parts in the Levine scheme.
Three others, including millionaire stock speculator Ivan Boesky, have yet to be sentenced.
Reich’s lawyer, Robert Morvillo, told Sweet before sentencing that his client ″did not make a single penny of profit″ from the information that he passed to Levine, unlike others who have been caught up in the scandal.
In a pre-sentencing memo to Sweet, Assistant U.S. Attorney Charles Carberry, agreed that Reich made no money from the 12 unlawful tips he gave Levine, but added that ″insider trading is a pervasive problem in the service industries involved in corporate reorganizations.
″...to deter others from making the same mistake, the court should sentence Reich to a period of incarceration,″ Carberry’s letter concluded.
Morvillo noted that Reich had been disbarred and ″has lost his status as a superstar lawyer...forever″ and lost all his assets in a $485,000 settlement of a Securities and Exchange Commission civil action against him.
″We don’t treat people who commit treason, bank robbers, people who violate narcotics laws, as harshly as the SEC″ does people ″who engage in the practice of insider trading, a largely victimless crime,″ said Morvillo.
″It is with a great deal of sadness and shame that I stand before you today,″ the prematurely gray Reich told Sweet.
″I beg you to be lenient,″ he said in a voice choked with emotion ″I assure you that I will never again do anything unlawful.″
But in unusually long sentencing remarks that quoted from Tennyson and Proust, Sweet told Reich ″by your giving insider information to Dennis Levine, you betrayed your trust, your family, your firm and all of us.″
Sweet, who appeared pained by the proceedings, said he agreed that ″this is not a case of greed or self-aggrandizement. This is a case of a brilliant lawyer, one of the brightest and the best.″
But he noted that Reich had chosen ″to be part of a social and business world where appearances count″ and which ″ignores reality and the law of the land.″
″You have, it is very sad to say, become a symbol of the sickness of our society and of that loss of integrity which cannot be condoned whatever the cost,″ Sweet told Reich.