Man jailed in US insider trading case

A former New Jersey postal worker was jailed for 33 months yesterday for giving friends secret information he learned while serving on a grand jury investigating accounting fraud at the drug firm Bristol-Myers Squibb.

Jason Smith, 30, is the first person to be sent to prison since investigators uncovered a $6.7m (£3.4m) insider-trading ring allegedly run by two whizzkids at Goldman Sachs in New York.

In one of the most elaborate schemes discovered by the Securities and Exchange Commission, the bankers David Pajcin and Eugene Plotkin are alleged to have paid for insider information from printworks employees and a Merrill Lynch analyst, and traded shares through online accounts belonging to friends and family including a Croatian seamstress and a New York stripper.

Mr Smith, a high school friend of Mr Pajcin, pleaded guilty in August to passing information to the pair last year when he was serving on a federal grand jury, a panel of private citizens set up to decide whether investigators had enough evidence to charge executives at Bristol-Myers.

Prosecutors said Mr Pajcin thought Bristol-Myers shares would fall based on a tip from Smith that a top company official would be charged with a crime, a tip which proved to be incorrect. "What I did was a terrible mistake," Smith told the court. "I'm ashamed."

Formal charges are yet to be laid against Mr Plotkin and Mr Pajcin. Stanislav Shpigelman, the former Merrill Lynch analyst, has admitted disclosing insider information on a pending acquisition. Nickolaus Shuster, a former worker at a Wisconsin printing plant, pleaded guilty in October to leaking details of share tips in Business Week before the magazine was distributed.