Dr. Yves Benhamou was sentenced to time served and three years supervised release after he cooperated with an insider-trading investigation and pleaded guilty to leaking secrets to a hedge fund manager about the biotech company Human Genome Sciences. Dr. Benhamou served as an adviser on a clinical drug trial.
In a separate case, a former Silicon Valley sales manager, James Fleishman, was sentenced to two-and-a-half years of imprisonment and two years supervised release for helping to convey inside information to hedge funds. The confidential information included revenue or margin numbers from executives at companies, including Advanced Micro Devices and Dell.
In imposing Mr. Fleishman’s sentence, Federal District Judge Jed S. Rakoff emphasized the need for deterrence. He said prosecutors in New York had been bringing insider-trading cases for 30 to 40 years, “and yet the prosecutions have not done enough to deter this serious and sophisticated crime.”
Mr. Fleishman, 42, worked for Primary Global Research, a so-called expert networking firm. He was convicted by a jury at trial in September on charges of conspiracy to commit securities fraud and conspiracy to commit wire fraud. He did not testify, and he did not address the court at sentencing.
In the last two years, dozens of people have been charged in New York with crimes related to insider trading, pleaded guilty or been convicted at trial.
The stiffest prison term handed down so far was 11 years for the Galleon hedge fund founder Raj Rajaratnam in October.
Dr. Benhamou, an infectious diseases expert, was credited during his sentencing in Manhattan federal court with being crucial to the prosecution of one of the most prominent hedge fund managers to become embroiled in an investigation of illegal stock tips solicited from consultants.
That hedge fund manager is Joseph Skowron, known as Chip, who ran health care funds at FrontPoint Partners. Mr. Skowron, a former physician, was sentenced to five years imprisonment in November after pleading guilty to trading in the stock of HGSI on nonpublic information he received from Dr. Benhamou.
Judge George Daniels of Federal District Court said he would have sent Dr. Benhamou to prison had it not been for his extensive cooperation in prosecuting Mr. Skowron. Judge Daniels ordered Dr. Benhamou to forfeit $52,138 and ordered him to pay $5.9 million in restitution.
Dr. Benhamou, 51, whose wife, brother and other relatives were in the courtroom, told the judge, “I can’t find the words to express how sorry I am and how much regret I feel.”
Dr. Benhamou spent 24 days in jail after his November 2010 arrest. He also spent about nine months confined to an apartment in New York, separated from his family in France, his lawyer, David Zornow, told the court.
According to court records, Mr. Skowron bribed Dr. Benhamou; the men met at a hotel in Barcelona in April 2007, and Mr. Skowron gave him an envelope with about 5,000 euros in cash.
After getting the tip about Human Genome and telling Dr. Benhamou to lie to regulators investigating the sale, Mr. Skowron passed on an envelope with at least $10,000 in cash when the men met in a hotel bar in Milan in April 2008, prosecutors said.
The tip Dr. Benhamou gave Mr. Skowron helped his funds avoid $30 million of losses because they sold their stake in Human Genome before it revealed problems with its experimental hepatitis C treatment in January 2008.
Article source: http://feeds.nytimes.com/click.phdo?i=4dd6db7478a9d3c615ea7eb5cbe98719
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