A former junior banker at Merrill Lynch was sentenced yesterday to three years and a month behind bars for leaking secret details on pending mergers to the ringleaders of an audacious scheme that also ensnared a stripper, a retired Croatian seamstress, spies in a Business Week print shop and a New Jersey mailman.
Stanislav Shpigelman, 24, pleaded guilty to the insider-trading charges in July, admitting that he passed on confidential information on deals, such as Reebok’s acquisition by Adidas, to the scam’s two masterminds, who racked up $6.4 million in ill-gotten gains by trading on the tips.
“I realize my actions are inexcusable,” Shpigelman told a Manhattan courtroom yesterday, as his parents, sister, other family members and friends sat behind him. “I should have walked away from the situation, but I didn’t have the strength.”
The promising young investment banker, who lives with his parents in Sheepshead Bay, Brooklyn, has been working for a moving company.
His family begged the judge for leniency.
“I know my son,” his mother, Jane, told U.S. District Judge Kenneth Karas. “I am afraid the stress of prison may break him.”
Judge Karas said he imposed the jail term with a “heavy heart” because Shpigelman had one of the most supportive families he had ever come across.
But the judge added that the stiff sentence was necessary to send a strong signal to other young bankers on Wall Street.
Shpigelman has asked to do his time at the Otisville Federal Correctional Institution in Otisville, N.Y., or the Schuylkill Federal Correctional Institution in Minersville, Pa.
The plot’s architects, former Goldman Sachs bankers Eugene Plotkin and David Pajcin, recruited Shpigelman in November 2004 at a Russian bathhouse in lower Manhattan called Spa 88.
Shpigelman, who had earlier got help from Plotkin in securing an internship at Merrill, said he felt pressured to cooperate. He netted less than $12,000 for providing inside info on six pending mergers.
Investigators were tipped off to the trading ring in late 2005, when the FBI got word of a suspicious trade ahead of news that Reebok was being acquired.
A retired underwear seamstress in Croatia bought $130,000 worth of Reebok options, a trade that turned into a $2 million profit in only two days.
The seamstress turned out to be the aunt of Pajcin, who controlled her account from New Jersey.
Investigators later learned of other plots hatched by Plotkin, 27, and Pajcin, 29, including the planting of forklift operator moles inside a BusinessWeek print shop to steal prepublication copies.
Pajcin also persuaded his friend, former New Jersey mailman Jason Smith, to divulge secret information while he served on a grand jury. Smith got a sentence of two years and nine months in prison.
Plotkin, who has pleaded not guilty, is out on bail awaiting trial. Pajcin is in a Brooklyn jail and is cooperating with investigators.
Shpigelman must report to prison on March 9.