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Ex-Galleon trader seeks to void insider trading conviction
January 22, 2015 / 9:01 PM / 3 years ago

Ex-Galleon trader seeks to void insider trading conviction

NEW YORK, Jan 22 (Reuters) - A former Galleon Group hedge fund trader on Thursday said he will ask a federal judge to throw out his conviction and 10-year prison sentence, one of the longest imposed in a broad U.S. government probe into insider trading.

In court papers, Zvi Goffer, 38, said the jury instructions at his trial were tainted, leading to his June 2011 conviction.

He said a reversal was justified in light of last month’s decision by a federal appeals court in New York that curbed prosecutors’ ability to bring insider trading cases.

In that Dec. 10 decision, the 2nd U.S. Circuit Court of Appeals said a trader, to be convicted of insider trading, needed to know the original source of a tip had received a “personal benefit” in exchange for that information.

The court said U.S. District Judge Richard Sullivan set too low a bar when instructing jurors who convicted hedge fund traders Todd Newman and Anthony Chiasson of insider trading, requiring that their convictions be reversed.

Sullivan also handled Goffer’s trial.

“Goffer’s trial was tainted unconstitutionally because the jury was never required to find the touchstone element of the crime,” the defendant’s knowledge of “the personal benefit motive of the original tipper,” Goffer’s lawyer Yale Klat wrote.

Goffer wants to be freed on bail while his conviction is reviewed. The 2nd Circuit and the U.S. Supreme Court previously rejected other arguments he raised to void his conviction.

A spokeswoman for U.S. Attorney Preet Bharara in Manhattan declined to comment. Klat declined immediate additional comment.

Prosecutors called Goffer the ringleader of a scheme to trade on tips about takeovers of network equipment maker 3Com Corp and Canadian drug company Axcan Pharma Inc.

Goffer was once known as “Octopussy,” after the James Bond film, for his many sources of information.

His former boss, Galleon founder Raj Rajaratnam, is serving an 11-year prison term for his own insider trading conviction.

More than 80 people have been convicted of or pleaded guilty to insider trading charges in Bharara’s probe, but some have challenged those outcomes in light of the Newman decision.

On Thursday, U.S. District Judge Andrew Carter threw out guilty pleas of four men over alleged insider trading related to IBM Corp.

Former SAC Capital Advisors LP portfolio manager Michael Steinberg is challenging his conviction.

Goffer is not eligible for release until August 2020.

The case is U.S. v. Goffer, U.S. District Court, Southern District of New York, No. 10-cr-00056. (Reporting by Jonathan Stempel; Editing by David Gregorio)

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