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Dirty Dozen: Lawyer Receives Longest-Ever Sentence for Insider Trading

Bruce Carton | June 6, 2012

Unlike Raj Rajaratnam, attorney Matthew Kluger was not a billionaire hedge fund founder. Unlike Rajaratnam, Kluger pleaded guilty to the charges of insider trading, sparing the government the expense of a trial. Unlike Rajaratnam, Kluger accepted responsibility for his actions, telling the court he was "terribly, terribly sorry." Unlike Rajaratnam, Kluger told the court he would "do anything I can to try and regain a modicum of the trust that I destroyed [with] so many people and so many institutions. On Monday of this week, however, U.S. District Judge Katharine Hayden sentenced Kluger to 12 years in prison, one year more than Rajaratnam received and the longest sentence ever handed down for insider trading. 

The Associated Press reports that Judge Hayden seemed particularly perturbed by the crime of insider trading, saying that it warranted a significant prison term because "it allows greedy, arrogant people to make money off others." She added that she found Kluger to be "amoral" and "thuggish." Judge Hayden also sentenced trader Garrett Bauer, who pleaded guilty to being involved in the scheme, to nine years in prison. 

After receiving the record sentence, Kluger referenced Rajaratnam, stating that "I guess it's better to take $68 million and go to trial and be unwilling to accept responsibility for what you did." Kluger's lawyer said he intends to appeal the sentence as overly harsh, arguing that his client made less than $1 million

Kluger's lawyer also noted that while Kluger believed that he, Bauer, and another man were were splitting the profit equally, Bauer actually made 30 times more than he did, which "dishonored" Kluger. This led Judge Hayden to ask the very same question I did back in December 2011 about this case: "How much honor is there among thieves?"