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UBS Executive Sentenced to Federal Prison
Bringing the curtain down on the biggest insider-trading case to rock Wall Street since the days of Ivan Boesky, a federal judge today sentenced a former UBS executive to federal prison for tipping others to stock-rating changes.
Judge Deborah Batts of U.S. District Court in Manhattan sentenced Mitchel S. Guttenberg, a former institutional client manager in UBS' equity research department, to six and a half years in custody. He had admitted his guilt in February.
Guttenberg has expressed remorse for his role in the five-year scam, which allegedly netted $15 million in illegal gains for 14 defendants at Morgan Stanley and the now-defunct Bear Stearns, but the judge was unmoved.
"From the moment he joined the investment review committee, he planned to give that information to others to use illegally," she said in handing down the sentence, which includes three years of supervision after he is released from jail.
In an untimely reminder of the greed that helped knock Wall Street off its moorings, seven defendants -- including former employees of Morgan Stanley and the now defunct Bear Stearns -- agreed to settle insider trading cases,.
In what the the Securities and Exchange Commission decribed as a "serial insider trading ring," the defendants made thousands of illegal trades based on advance knowledge of changes in UBS Securities' ratings of a range of stocks.
In March 2007, federal authorities accused Guttenberg, then an executive director in the UBS equity research department, of illegally tipping others to upcoming analyst stock upgrades or downgrades.
The commission says he gave the information to two Wall Street traders, Erik R. Franklin and David M. Tavdy, in exchange for sharing in the profits they made from trading on that information.
The two traders, in turn, tipped others who traded on the information, including all whose settlements were just approved by a federal judge in New York.
The defendants all settled S.E.C. civil lawsuits against them in September without admitting or denying the allegations.
by Mark Stein
