NEW YORK—A former Ernst & Young LLP partner was sentenced to a year and a day in prison on Monday after he was convicted last year of fraud charges in an insider-trading scheme where he allegedly tipped a Pennsylvania broker about pending corporate takeovers.
At a hearing, U.S. District Judge Miriam Goldman Cedarbaum in Manhattan sentenced James Gansman, a lawyer who resigned from Ernst & Young in October 2007. He was convicted of six counts of securities fraud, but acquitted of conspiracy and three securities fraud counts in May 2009.
“I stand before the court today willing to take responsibility for my actions,” Mr. Gansman said.
Mr. Gansman, of New York, worked in Ernst & Young’s transactional advisory services department and was the partner in charge of the firm’s human resources consulting services, prosecutors from the U.S. Attorney’s office in Manhattan have said.
Prosecutors had alleged that Mr. Gansman, from November 2005 to December 2007, provided Donna Murdoch, a former managing director at a Pennsylvania broker-dealer who had a close personal relationship with Mr. Gansman, with inside information about several proposed deals in which Ernst & Young clients were involved.
As a result, Mr. Gansman violated Ernst & Young’s written policies and the duty of trust owed to the firm’s clients, the government said.
Mr. Gansman acknowledged during the sentencing that he had an affair.
“This is a good person who made a bad decision,” said Barry Bohrer, Mr. Gansman’s lawyer.
Ms. Murdoch, of Malvern, Pa., purchased options of the target companies in the proposed deals, generating more than $390,000 in illegal profits, prosecutors said. She pleaded guilty to obstruction of justice, making false statements and 15 counts of securities fraud in December 2008. She is awaiting sentencing.
The deals included the takeover of Dade Behring Holdings Inc. by Siemens AG; Spectralink Corp.’s merger with Polycom Inc.; and K2 Inc.’s acquisition by Jarden Corp.
Mr. Gansman was cleared of two fraud counts related to options trades of Freescale Semiconductor Inc. before its buyout by a group lead by private-equity firm Blackstone Group LP, but convicted of a third fraud count related to Freescale option trades.
Prosecutors had alleged Ms. Murdoch profited by more than $158,000 on three purchases of Freescale options in August 2006 and in September 2006.
