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Former Ernst & Young Partner Found
Guilty in Insider Trading Scheme
LEV L. DASSIN, the Acting United States Attorney for
the Southern District of New York, announced that former Ernst &
Young, LLP, ("E&Y") partner JAMES GANSMAN was found guilty today,
following a two-week jury trial, of six counts relating to
insider trading based on confidential information he obtained
from E&Y.
As established by the evidence at trial before United
States District Judge MIRIAM GOLDMAN CEDARBAUM:
As a partner at E&Y, GANSMAN had access to confidential
firm information about several merger and acquisition
transactions involving E&Y clients. GANSMAN passed the inside
information to another person—investment banker DONNA MURDOCH—who traded on the information, gaining more than $300,000 in
profits. (MURDOCH previously pleaded guilty in this matter and
testified during the Government’s case at GANSMAN’s trial.)
In particular, from May 2006 through July 2007, E&Y
advised various entities in connection with mergers and
acquisitions involving publicly traded companies, including
Freescale Semiconductor, Portal Player, Spectralink, K2, and Dade
Behring. GANSMAN, an attorney, was the partner at E&Y in charge
of the human resource consulting services that E&Y provided for
the transactions. As such, GANSMAN obtained confidential inside
information about the transactions which he regularly leaked to
MURDOCH. After receipt of the information, MURDOCH purchased
securities of the targets of those acquisitions, and, following
public disclosure of the acquisitions, sold the previously
purchased securities for a substantial profit.
The jury found GANSMAN guilty of six counts of
securities fraud (Counts Five through Ten of the Indictment).
Each of those counts carries a maximum prison term of 20 years
and a maximum fine of the greater of $5 million or twice the
gross pecuniary gain or loss from the offense. GANSMAN was
acquitted of one count of conspiracy to commit securities fraud
(Count One) and three other counts of securities fraud (Counts
Two through Four).
GANSMAN, 48, resides in New York, New York. GANSMAN is
scheduled to be sentenced by Judge CEDARBAUM on October 1,
2009 at 10:00 am.
Mr. DASSIN praised the investigative work of the
Federal Bureau of Investigation and thanked the United States
Securities and Exchange Commission for its assistance. He added
that the investigation is continuing.
Assistant United States Attorneys JONATHAN R. STREETER
and VIRGINIA CHAVEZ ROMANO are in charge of the prosecution.
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