7:57 p.m. | Updated
A former executive at the Nasdaq OMX Group was sentenced to three and a half years in prison on Friday after admitting he earned about $750,000 by trading on secret corporate information.
Donald L. Johnson, a onetime managing director at Nasdaq, pleaded guilty to one count of securities fraud. He said that from 2006 until his retirement in 2009, he had traded illegally in the stocks of companies that provided him with advance word about their earnings or personnel changes.
“If I had to come up with a word for what I did, it is stupidity,” Mr. Johnson, 57, told a federal judge in Alexandria, Va., on Friday, according to Bloomberg News. “There aren’t any answers to explain my activity.”
As a senior executive on the stock exchange’s so-called market intelligence desk, Mr. Johnson worked with companies that wanted to understand how impending news might affect their share prices. In working with Mr. Johnson, the companies would routinely disclose confidential information to him.
Mr. Johnson took the data and, using his work computer, traded in an online brokerage account in his wife’s name.
At the time of his guilty plea in May, Lanny A. Breuer, assistant attorney general of the Justice Department’s criminal division, called Mr. Johnson “a fox in a henhouse” and described his crime as “a particularly shocking abuse of trust.”
Mr. Johnson’s prison term fell in the middle of the 37- to 46-month range suggested by nonbinding federal sentencing guidelines. The proposed range is tied in large part to the amount of illegal profit earned from the crime.
His sentence came during a week when federal prosecutors asked a judge to sentence Raj Rajaratnam, a former Galleon Group hedge fund manager and the most prominent figure in the government’s sweeping insider trading investigation, to a term of 19 and a half to 24 and a half years in prison. The government said that Mr. Rajaratnam gained $64 million in insider trading profits.
Article source: http://feeds.nytimes.com/click.phdo?i=a416c92b3d49c34c57b53a17435aeb43
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