March 23 (Bloomberg) -- Ex-Lehman Brothers Holdings Inc. broker Matthew Devlin, who cooperated with a U.S. probe of insider trading, was sentenced to three years of probation after prosecutors cited his “noteworthy” assistance.
U.S. District Judge William Pauley said today that Devlin, 38, could have faced as long as 46 months in prison. The judge said he wasn’t imposing a prison term because Devlin made recordings of co-conspirators and helped the government gather evience against four others involved in the insider-trading scheme.
Devlin, who earned $23,000 in the scheme, knew the tips he provided to his co-conspirators would be used “to undermine the integrity of the financial markets which our nation relies on,” the judge said, “so, he betrayed his country as well.”
“All of it was completely tragic and senseless for a sum of money to his benefit that was a rounding error in his compensation,” Pauley said.
The judge said it was important that Devlin agreed to cooperate with the government immediately.
“There is no question his cooperation was substantial, yet there would have been no crime here if Mr. Devlin hadn’t started the ball rolling down the hill because he was the source of the inside information,” Pauley said.
The judge said insider-trading cases are very difficult for the government to detect “unless they can convince someone to cooperate.
‘‘So a scheme has been brought to an end through Mr. Devlin’s cooperation,’’ Pauley said.
‘‘It should torment you,’’ he said later, ‘‘but you have to remember you brought it all upon yourself for no reason that I can discern.’’
Devlin apologized to his family before sentencing.
‘‘The actions that brought me to the situation today were reckless, selfish and inexcusable,’’ Devlin said, his voice breaking with emotion.
‘‘I am a different man than the one that FBI agents approached 3 1/2 years ago,’’ he said. ‘‘I take full responsibility for the choices I made. I’m deeply ashamed and embarrassed about the decisions I made before my arrest.’’
The U.S. said Devlin gleaned information from his wife, Nina Devlin, who at the time was a Brunswick Group public-relations executive involved with corporate deals. Nina Devlin wasn’t charged with wrongdoing.
Matthew Devlin then passed tips to former day trader Jamil Bouchareb and his partner, Daniel Corbin, former Paul Hastings Janofsky & Walker LLP lawyer Eric Holzer and Frederick Bowers, another former Lehman salesman, Assistant U.S. Attorney Reed Brodsky told Pauley today before he imposed the sentence.
‘‘To really unpack this we needed and relied upon Mr. Devlin’s cooperation,” Brodsky said. “Had he not cooperated, it would have been extremely difficult to have brought actions against the tippees.”
Devlin pleaded guilty in December 2008 to four counts of conspiracy to commit securities fraud and one count of securities fraud. He then agreed to work secretly for the government and recorded telephone calls with his co-conspirators, Brodsky said.
All four co-defendants pleaded guilty. Holzer was sentenced to five years’ probation; Bouchareb was sentenced to 2 1/2 years in prison; Corbin was sentenced to six months in prison. Bowers was sentenced to probation.
Pauley today also ordered Devlin to pay a $10,000 fine. He already agreed to forfeit the $23,000 he earned in the scheme, his lawyer, Mary Mulligan, said in court papers. She declined to comment after court.
The case is U.S. v. Devlin, 08-CR-1307, U.S. District Court, Southern District of New York (Manhattan).
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