U.S. Audit Firm Employee Sentenced in Illegal Insider Trading Case

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I must apologize. In my previous posts, I noted that lawyers, consultants, corporate officers, and hedge funds often engage in illegal insider trading. I failed to mention another U.S. business sector that often commits illegal insider trading. U.S. audit firms have now been implicated in illegal insider trading. Illegal insider trading is still profitable and the penalties are light.

Here is a real world example. James Gansman, a former Ernst & Young LLP employee, was sentence to a year and one day in jail for illegal insider trading on February 8, 2010. Mr. Gansman is a lawyer and fed insider information to Donna Murdoch, a managing director at a Pennsylvania broker-dealer. Mr. Gansman also had an affair with Ms. Murdoch. So, let’s recap. Mr. Gansman was a partner at a prestigious audit firm, a lawyer, convicted of six counts of securities fraud, and had an affair. He is truly a well-rounded scumbag.

Congratulations are due to U.S. District Judge Miriam Goldman Cedarbaum. Judge Cedarbaum’s light sentence of Mr. Gansman ensures others will continue to commit illegal insider trading. A year and one day in jail – you’ve got to be kidding me. Way to go Judge Cedarbaum. Mr. Gansman should be disbarred.

What does this mean to you? When hiring a U.S. firm to work for you, know that they are very likely to extract and use confidential information about you and your firm to generate illegal profits. I thought this was contained to law firms, consulting firms, hedge funds, and corporate officers. Prestigious U.S. audit firms are also highly likely to commit illegal insider trading. This is how business is now done in America.

Illegal insider trading is still profitable and the penalties are light. Just last week Mark Lenowitz, associated with the Galleon Group illegal insider trading case, was sentenced to three years probation. Mr. Gansman was only sentenced to a year and one day in jail. America’s once strong foundation is now rotten will corruption. A question to ponder – How long can a country remain great when vast numbers of its best and brightest citizens are corrupt?