A former clerical worker at a prominent New York law firm was sentenced to six months in prison Monday for illegal insider trading and for lying about his activities to the Securities and Exchange Commission.
Manohar Lal Madan, 51, pleaded guilty last November to five counts of conspiracy, mail fraud, securities fraud and perjury.
Madan was a word-processor operator at the firm of Wachtell, Lipton, Rosen & Katz from 1976 to 1982. He admitted that between 1979 and 1982 he used his access to confidential documents to ferret out information that allowed him and several associates to reap $2 million in profits on Wall Street.
Wachtell, Lipton is one of the leading firms in mergers and acquisitions, where unexpected tender offers can mean huge profits for stockholders in target companies.
Figured Out Names
The names of such target companies were deleted from the documents that Madan was given to type, but, by using other information--such as the target company's industry and its stock price--he was often able to figure out what firms were involved, government lawyers said.
Federal law prohibits corporate officers, lawyers and others with advance knowledge of such buyouts and other corporate secrets from taking advantage of that information in the stock market.
Besides giving Madan six months in prison, U.S. District Judge Whitman Knapp suspended an additional 2 1/2 years of jail time and gave him three years' probation.
Madan personally netted $150,000 from the insider trading, government lawyers said. An associate who made more than $1 million, Krishnan Taneja, was sentenced in April to a similar jail term.
Taneja, who was a civil engineer in the Manhattan borough president's office, later lost his fortune in other stock market investments, prosecutors said.