A former Goldman Sachs Group Inc. investment banking associate who helped mastermind a $6.7-million insider trading ring was sentenced Thursday to almost five years in prison for misusing information from an analyst, a juror and a magazine.
Eugene Plotkin, who worked in the fixed-income research division of Goldman, the largest U.S. securities firm by market value, is one of two men who orchestrated a scheme to trade on secret tips from a Merrill Lynch & Co. analyst, a New Jersey grand juror and BusinessWeek printing plant workers.
"I let down society, deeply hurt my loved ones and brought irreparable damage on my family," Plotkin, 28, told U.S. District Judge Richard Holwell in New York.
The case has led to guilty pleas from six people, including Plotkin and accomplice David Pajcin, who cooperated with U.S. prosecutors. Former Merrill mergers and acquisitions analyst Stanislav Shpigelman is serving a three-year prison term for leaking secrets to them.
"They were partners," Assistant U.S. Atty. Helen Cantwell told the judge. "They would talk about it, agree on a strategy."
Prosecutors last year stepped up their fight against insider trading. An ex-Morgan Stanley vice president and her husband, a former ING Groep analyst, were sentenced to 18 months in prison for trading on confidential news. Employees from Bear Stearns Cos. and Credit Suisse Group have been convicted or accused of trading on inside information.
Plotkin, a Harvard University graduate, sentenced to 57 months in prison, faced as much as 71 months under U.S. sentencing guidelines.
His scheme had three parts, prosecutors said. He and Pajcin traded on tips from Shpigelman, a Merrill analyst they recruited in a 2004 meeting at a lower Manhattan sauna. A New Jersey mail carrier leaked them news from a grand jury on which he was serving. And two workers at a Wisconsin printing plant told them the names of companies about to appear in BusinessWeek magazine.
In a court filing seeking leniency, defense lawyer Edward Little alleged the plot was hatched by Pajcin, whom Plotkin befriended while the two were at New York-based Goldman.
Pajcin lured Plotkin into the ring with talk of "how successful stock traders had gained 'edges,' " and told Plotkin that "criminal types" he knew in Croatia ran a similar BusinessWeek scheme, Little claimed in court papers. It was Pajcin's friend who was on the grand jury and Pajcin who got Shpigelman's leaks, Little alleged. Plotkin introduced the Merrill analyst to Pajcin, the lawyer claimed.
In 2005, Shpigelman told Pajcin about Adidas' planned bid for Reebok International Ltd., generating $6.1 million in profits for Pajcin and others, including his aunt, a seamstress in Croatia, and the father of his ex-girlfriend, Little claimed.
"Plotkin had no idea of how much Pajcin had expanded his network of tippees," Little said in court papers. Pajcin's lawyer, Jesse Siegel, declined to comment on the allegations. Pajcin is to be sentenced Jan. 18.