Ex-hedge fund boss in NYC sent to prison for more than 2 years in record inside trade case

NYC judge blasts Wall Street greed at sentencing

NEW YORK — A former top executive at a $1 billion hedge fund investment firm was sentenced to more than two years in prison Friday in the first sentencing to result from what prosecutors have called the largest hedge fund insider trading case in history.

Mark Kurland, 61, of Mount Kisco, N.Y., was sentenced Friday to two years and three months in prison and ordered to forfeit the $900,000 he made through illegal trades by a judge who blamed the attitudes of people like Kurland on the country’s financial collapse two years ago.

U.S. District Judge Victor Marrero said Kurland, a co-founder of New Castle Partners hedge fund in Manhattan, “frankly should have known better” than to join an inside trading scheme that led to the arrests of top executives including one-time billionaire Raj Rajaratnam.

“He had a choice as a leader of the financial industry. He could have led by example. Instead, he chose to follow. He became a joiner, surrendering to the spree of the financial market’s virtual mob mentality that nearly brought down this country’s financial industry in the quest for ever bigger and faster gains,” Marrero said.

Kurland, who had pleaded guilty to conspiracy to commit securities fraud and securities fraud, was among 11 people who have pleaded guilty in the case. Many of the others had agreed to cooperate with the government, a step which delays their sentencing.

Rajaratnam, the portfolio manager for the Galleon Group hedge fund, has pleaded not guilty and disputed government claims that he pocketed as much as $50 million through a network of cheating executives at financial firms and companies privy to inside information.

The judge criticized pleas for leniency on Kurland’s behalf on the grounds that he had a minimal role, that he did not benefit much financially, that others were more at fault and that there was no real harm to the markets.

“To some extent, this country’s financial meltdown was fueled precisely by the attitudes manifested by Mr. Kurland in this proceeding, and repeated by defendants in other related cases,” the judge said.

“Mr. Kurland’s actions, stemming from a recognized leader of the industry, compromised the financial market’s integrity at a time of financial crises and widespread concern about corruption, rampant recklessness, and arrogant greed at the highest levels of the industry,” he added.

Before he was sentenced, Kurland said his crime had “destroyed my reputation and everything I have worked hard for my entire life.”

He said he was “heartbroken and profoundly ashamed” and conceded that he should have known better.

“The void left by the sudden end of my career will never end,” he said.

Kurland said his torment was “unimaginable and very painful.”

At his plea, Kurland admitted engaging in insider trading between August 2008 and January 2009, after receiving tips about confidential information involving three companies.

New Castle Partners operated as the equity hedge fund group of Bear Stearns Asset Management Inc. until its parent company was acquired in March 2008 by JPMorgan Chase & Co. In January 2009, New Castle Partners ended its affiliation with JPMorgan and formed a new hedge fund, New Castle Partners LP.