Tuesday, November 4, 2008

Ex-UBS Executive Is Sentenced to Six and a Half Years in Prison After Guilty Plea

According to Reuters, a former UBS executive has received a sentence of six and a half years in prison for his role in an what has been termed the most pervasive insider trading ring since the 1980s. The defendant, Mitchel Guttenberg, pleaded guilty in February 2008.

Mitchel Guttenberg, a former institutional client manager in UBS' equity research department, admitted in a guilty plea in February to selling nonpublic information about the bank's stock recommendations.

In handing down the sentence, which includes three years of supervision after his release, Judge Deborah Batts of U.S. District Court in Manhattan said, "from the moment he joined the (UBS) investment review committee he planned to give that information to others to use illegally."

Batts did not fine Guttenberg, who expressed his remorse to his family, the court and his former employer. His lawyer Sean O'Shea described Guttenberg as "a broken man" whose wife had left him, and he was living in his sister's apartment.

Guttenberg was among 13 people, including former employees of Wall Street firms such as Bank of America Corp, Morgan Stanley and Bear Stearns Co Inc, who were criminally charged last year in an insider trading ring.

Guttenberg admitted in court that on numerous occasions between 2001 and 2006 he told two traders about upcoming analyst stock recommendations, including those for Caterpillar Inc and Goldman Sachs Group Inc shares.

The information about upcoming UBS analysts' upgrades and downgrades was used to execute hundreds of transactions, netting more than $17.5 million, prosecutors said.

In court on Monday, Assistant U.S. Attorney Andrew Fish told the judge that the securities industry is "full of people like Mr. Guttenberg. They have access to information they can use to make millions."

Guttenberg had pleaded guilty to two counts of conspiracy and four counts of securities fraud. He had faced 78 months to 97 months in prison under sentencing guidelines.

The judge ordered Guttenberg to begin his sentence in 60 days. She recommended that he serve his term in the minimum security prison at Fort Dix, New Jersey.

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