Ex-Goldman Analyst Gets Time Served for Trade Scheme

Ex-Goldman Analyst Gets Time Served for Trade Scheme

Jan. 18 (Bloomberg) -- A former Goldman Sachs Group Inc. analyst who led a $6.7 million insider trading scheme and then helped prosecutors build criminal cases against his accomplices was sentenced to time served and three years supervised release.

David Pajcin, who agreed to remain in jail after his arrest, is one of six men convicted in the case. With former colleague Eugene Plotkin, he traded on leaks from a Merrill Lynch & Co. analyst, a grand juror and two workers at a factory that printed McGraw-Hill Cos.' Business Week magazine. Pajcin, who was fined $10,000 and forfeited $6.7 million, has been held for 26 months.

``Pajcin came in very early in the process and aided the government in what became a very serious investigation,'' Assistant U.S. Attorney Helen Cantwell told U.S. District Judge Victor Marrero at the sentencing today in Manhattan federal court. Pajcin pleaded guilty in 2006 to conspiracy, lying to securities regulators and obtaining confidential data.

Prosecutors last year stepped up their fight against insider trading. An ex-Morgan Stanley vice president and her husband, a former ING Groep NV analyst, were sentenced to 18 months in prison for trading on confidential news. A former Credit Suisse Group investment banker is now on trial in Manhattan federal court for leaking stock tips.

Almost Five Years

Plotkin was previously sentenced to almost five years in prison. Former Merrill mergers analyst Stanislav Shpigelman is serving a three-year term.

``I would like to apologize to the court, to the U.S. government and to my family for the crimes I committed,'' Pajcin said. Pajcin, who worked as an analyst in the fixed income, currency and commodities unit at New York-based Goldman, the largest U.S. securities firm by market value, received a reduced sentence because of his cooperation.

The ring operated from mid-2004 to mid-2005, prosecutors said. The scheme had three parts, according to court papers.

Pajcin, a resident of Clifton, New Jersey, and Plotkin traded on tips from Shpigelman, who they recruited in a 2004 meeting at a lower Manhattan sauna. A New Jersey mailman also leaked them news from a grand jury on which he was serving, and two workers at a Wisconsin printing plant told them the names of companies about to appear in Business Week magazine.

The mailman and factory workers have also pleaded guilty.

According to Plotkin's court filings, Pajcin masterminded the plot with talk of ``how successful stock traders had gained `edges,''' and told Plotkin that ``criminal types'' he knew in Croatia ran a similar Business Week scheme. It was Pajcin's friend who was on the New Jersey grand jury and Pajcin who got Shpigelman's leaks, Plotkin claimed.

Planned Bid

In 2005, Shpigelman told Pajcin about Adidas AG's planned bid for Reebok International Ltd., generating $6.1 million in profits for Pajcin and others, including his aunt, a seamstress in Croatia, and the father of his ex-girlfriend, Plotkin said.

Pajcin began cooperating after authorities learned of the scheme and ``is the principal source of the government's information,'' Plotkin said in court papers.

His lawyer, Jesse Siegel, asked for leniency ``in view of the very extensive assistance he provided to the government,'' adding that he would also never be able to work in finance again. Pajcin will likely be released today, Siegel said.

The case is U.S. v.Pajcin, 05-CR-1284, U.S. District Court, Southern District of New York (Manhattan).

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