The second insider trading case ended today with the conviction of three Wall Street traders, on charges they bribed lawyers in exchange for confidential information.   The federal jury in Manhattan found Zvi Goffer, 34, and 2 co-conspirators - brother Emanuel Goffer and Michael Kimelman - guilty of insider trading, the latest development in the government’s massive investigation into insider trading at hedge funds.  The jury's decision, after 5 days of deliberation, came one month after the conviction of Raj Rajaratnam - one-time billionaire who founded the Galleon Group. 

Sentencing was set for 9/23/11 for Kimelman and 10/7 for the Goffer brothers.  All three were permitted to remain free on bail pending sentencing.  David Pettus, a lawyer for Zvi Goffer, said the verdict was a disappointment and would be appealed.  Michael Sommer, a lawyer for Kimelman, said his client also would appeal.  Michael Ross, a lawyer for Emanuel Goffer, declined to comment.

Much of the illegal trading featured in the Mr. Goffer trial was based on on illegal tips about mergers and acquisitions from 2 corporate lawyers in the NY offices of Ropes & Gray - Arthur Cutillo, Brien Santarlas.  Both lawyers had previously pleaded guilty to provding Mr. Goffer and others with information about the secret deals.  Mr. Santerlas testified during the trial. 

As in the Rajaratnam trial, the government relied on a vast trove of taped conversations to try to prove their case that Zvi Goffer had paid 2 attorneys nearly $100,000 in 2007 and 2008 for the inside tips.  The SEC had said Goffer - who worked for Rajaratnam for 9 months before starting his own firm - was nicknamed "Octopussy" because of his reputation for reaching for information from multiple sources.  His brother and Kimelman worked at Zvi Goffer's firm.

In closing arguments, Assistant U.S. Attorney Richard Tarlowe had urged jurors to follow the trail of taped phone conversations to see how the defendants carried out their crimes and then tried to hide their behavior with prepaid phones and in-person meetings on the street.

Two Week Trial.   During the two-week trial, prosecutors introduced evidence that Zvi Goffer gave conspirators the prepaid cellular telephones in an effort to reduce detection by law enforcement.  One-time lawyer Brien Santarlas testified for the government that envy of big Wall Street salaries motivated him to provide inside information about companies he worked for at the corporate firm Ropes & Gray.  He said he accepted $25,000 in cash after passing along his first big inside tip.

The defense countered by arguing that the government was trying to win a conviction based on just a few taped conversations among 18,000 phone calls, text messages and emails they recovered.   [Associated Press, Dealbook, 6/13//11]