UPDATE 3-Kurland to serve 27 months for Galleon case role

* First sentencing on charges stemming from Galleon case

* Ex-colleague of Danielle Chiesi, a principal defendant

* Judge rebukes Kurland as symbol of Wall Street crisis
(Adds Moffat’s lawyer comment, judge’s quote on market

By Grant McCool

NEW YORK, May 21 (BestGrowthStock) – The first Wall Street
executive to be sentenced in the sprawling Galleon hedge fund
illegal insider trading case was ordered to serve two years and
three months in prison on Friday.

Mark Kurland, once a senior managing director at New Castle
Funds LLC in New York, was a supervisor of former trader
Danielle Chiesi who, along with Galleon founder Raj Rajaratnam,
is a principal defendant scheduled to go on trial in October.

“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 nation’s economy in the quest for ever
bigger and faster gains,” U.S. District Judge Victor Marrero
told his crowded Manhattan courtroom.

Kurland’s sentencing came four months after he pleaded
guilty to conspiracy and securities fraud charges in what
prosecutors describe as the biggest probe of illegal insider
trading involving hedge funds in the United States. The
government charged 21 traders, executives and lawyers last
October and November.

The judge dismissed an attempt by the former hedge fund
manager’s lawyer, Patrick Smith, to minimize his client’s role
in overlapping insider trading schemes compared with an accused
former International Business Machines Corp (IBM.N: ) executive,
Robert Moffat.

In a plea deal with Moffat, the government has agreed that
his sentence should not exceed six months’ imprisonment.

During the proceeding, U.S. prosecutor Reed Brodsky said
that while the government believed Kurland was motivated by
making money, Moffat and Chiesi had an “intimate relationship.”
Chiesi’s lawyer, Alan Kaufman, declined to comment.

Moffat’s lawyer, Kerry Lawrence, also declined to comment
on the prosecutor’s remark but he said he would seek probation
for Moffat when he is sentenced on Sept. 13. Brodsky said the
government would seek a six-month prison sentence for Moffat.

In January, Kurland admitted to participating in a scheme
with Chiesi from mid-August 2008 through January 2009, a period
of deepening crisis on Wall Street. The judge said Kurland’s
actions “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.”

About 70 relatives, friends and investors packed the
courtroom in support of Kurland, who slumped with his hands in
his pockets as he stood listening to the judge impose the
sentence of 27 months. He was ordered to report to prison on
July 23.

Kurland, 61, told the court that his actions were “not what
I am about” and “This is the saddest and most difficult day of
my life.”

Kurland agreed to forfeit $900,000, the amount he was said
to have earned in illegal profits, but chose not to cooperate
with investigators — unlike eight other defendants, some of
them former friends of Rajaratnam or former Galleon employees.

Prosecutors accused Chiesi of obtaining inside information
from Moffat, Rajaratnam and an executive at Akamai Technologies
Inc (AKAM.O: ) on several publicly traded companies, including
IBM, Sun Microsystems Inc (ORCL.O: ), Advanced Micro Devices Inc
(AMD.N: ) and Akamai.

In turn, Chiesi shared the information with Kurland and
they traded on it in the accounts of New Castle hedge fund.

In all, 11 of the 21 accused have pleaded guilty to
criminal charges. Rajaratnam and Chiesi have pleaded not guilty
and have asked a judge to suppress secretly recorded telephone
conversations from the trial evidence.

The cases are USA v Kurland, U.S. District Court for the
Southern District of New York, No. 10-00069 and USA v
Rajaratnam et al No. 09-01184.

Investing Research

(Reporting by Grant McCool; Editing by Richard Chang, Matthew
Lewis and Leslie Gevirtz)

UPDATE 3-Kurland to serve 27 months for Galleon case role