A former software engineer at a prominent California law firm was sentenced Wednesday to two years in prison for insider trading by a judge who noted that he should have realized the dangers of what he was doing when one of his firm's lawyers was arrested on the same charges in a separate prosecution.
Dimitry Braverman, 42, of San Mateo, California, was sentenced after pleading guilty to securities fraud last November. Prosecutors say he earned more than $300,000 illegally from September 2010 through December 2013.
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"You clearly knew what you were doing was wrong," U.S. District Judge Paul A. Engelmayer in Manhattan told him as he noted that Braverman stopped illegal trading for 18 months after former lawyer Matthew Kluger of Oakton, Virginia, was arrested in 2011.
Prosecutors said Kluger used his position at the Washington, D.C., office of Wilson Sonsini Goodrich & Rosati to pass along secrets about pending mergers and acquisitions in an insider trading scheme that reaped $37 million over 17 years. Kluger received the longest insider trading sentence in history — 12 years — when he was sentenced in June 2012 in Newark, New Jersey.
"If ever there was a wakeup call for you to stop your inside trading, that was it," Engelmayer told Braverman of Kluger's arrest.
Braverman, originally from Ukraine, apologized before he was sentenced. In a letter to the judge, he wrote: "I made a horrible mistake that I regret with every passing day. I deeply regret damage I caused to my former employer, a company that always treated me with respect and where I worked for more than 13 years."
He had access to inside information as a senior information systems engineer at the Palo Alto, California-based firm.
Engelmayer, who also ordered 100 hours of community service, said Braverman's crime went on for too long and was too serious and deserved a lengthy prison term to deter others.
Matthew L. Schwartz, a former federal prosecutor who worked on the case but now specializes in global investigations and white collar defense at Boies, Schiller & Flexner, said the case shows companies must guard against threats from within as much as threats from the outside when it comes to cybercrime.
"Frankly, often times the more dangerous threat is from insiders, people who already have access to a company's system and exploit that system for their own good," he said.