(Updates with lawyer’s recommendation in third paragraph.)
Sept. 15 (Bloomberg) -- A former Taiwan Semiconductor Manufacturing Co. manager was sentenced to 18 months in prison for his part in an insider-trading scheme involving Primary Global Research LLC.
Manosha Karunatilaka, of Marlborough, Massachusetts, who worked as an account manager for Taiwan Semiconductor, pleaded guilty in May to accepting about $35,000 to pass material, nonpublic information about the company’s orders while also working as a consultant for Primary Global.
His lawyer, Brad Bailey, had asked U.S. District Judge Jed Rakoff in Manhattan for a one-year sentence, with six months to be served in prison and six months of home confinement.
“I want to say how sorry I am for my conduct,” Karunatilaka, 37, told Rakoff. “I am very sorry for my actions.”
An analyst at an unidentified New York-based hedge fund, which used Primary Global’s services, spoke to Karunatilaka frequently from 2008 to 2010, prosecutors said in court papers. In May 2009, acting on a recommendation from Karunatilaka to bet that Taiwan Semiconductor shares would fall, the fund made a profit of about $1.7 million, the U.S. said.
While Bailey had argued that his client had only earned $35,000 for the tips he passed and shouldn’t be held responsible for the $1.7 million in profits a fund earned as a result of the tips his client passed. Rakoff said he didn’t agree.
“For tens of thousands of dollars, he cheated the system and provided sophisticated stock traders with an unfair advantage over the average investor,” Manhattan assistant U.S. attorneys Antonia Apps and David Leibowitz said in the papers.
While Karunatilaka cooperated with the U.S. and accepted responsibility for his crimes, prosecutors said he deserved a prison term ranging from 37 to 46 months “to deter Karunatilaka and other corporate employees from engaging in insider trading.”
--With assistance from Thom Weidlich in New York. Editors: Mary Romano, Fred Strasser
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