NEW YORK (Reuters) - A securities research analyst who had publicly refused to cooperate in the U.S. government’s sweeping insider-trading probe was sentenced to more than four years in prison on Tuesday after admitting he supplied hedge funds with illegal tips.
John Kinnucan, who had run Broadband Research LLC in Portland, Oregon, has been in custody since his arrest last year after failing to meet bail. He appeared gaunt and wore a full beard as he apologized briefly before he was sentenced in U.S. District Court in Manhattan.
“I’d just like to say I‘m very sorry to everyone involved,” he told U.S. District Judge Deborah Batts. “It wasn’t my intention and I‘m deeply sorry.”
Kinnucan, 55, gained wide attention in the financial world in late 2010 with his public refusal to wear an FBI wire to cooperate with the government’s trading probe. His research firm operated in an opaque industry that provides insight for hedge funds and has become a target for investigators examining how information is traded on Wall Street.
He was arrested last February, accused of passing tips to hedge funds, including sales trends for Apple Inc.’s iPhone, as well as tips related to OmniVision Technologies Inc and SanDisk Corp.
In July, Kinnucan pleaded guilty to one count of conspiracy and two counts of securities fraud. He has also admitted trying to obstruct justice by leaving intimidating voicemails and writing e-mails to federal prosecutors, Federal Bureau of Investigation agents and a cooperating witness.
While in custody, Kinnucan has become “a shadow of himself,” his attorney, Jennifer Brown, told the court. She said he lost 35 pounds, was depressed and had not sought communication with his family, including two brothers and a sister who were in the courtroom on Tuesday.
“He is humbled and ashamed and has really taken in the message of what he’s done here,” Brown said.
Batts recommended that Kinnucan serve his 51-month sentence at a prison south of Portland, Oregon, and be enrolled in an alcohol abuse program there.
The judge acknowledged letters written on Kinnucan’s behalf by his friends and family, noting that he has shown he can be kind. But she also noted the seriousness of insider trading and that obstruction of justice “cannot be tolerated,” despite his personal problems.
Kinnucan’s “sense of entitlement and anger were equally, if not more” to blame for his behavior, she said.
The case was brought by the office of Preet Bharara, the U.S. Attorney for the Southern District of New York, which includes Manhattan. Bharara’s office has ramped up insider-trading prosecutions in recent years, winning convictions of hedge fund billionaire Raj Rajaratnam and former Goldman Sachs director Rajat Gupta, among dozens of others.
In a statement, Bharara said that Kinnucan’s sentence “is a fitting conclusion to a criminal odyssey that began with the buying and selling of inside information and evolved into a vile and very public campaign” to threaten public servants.
(The story corrects company name in headline to Broadband, not Broadbank)
Reporting By Bernard Vaughan; Editing by Martha Graybow, John Wallace and Leslie Adler