Covering an insider trading case

John Kinnucan’s sentencing Tuesday made headlines across the wires and papers. The story’s a juicy one about a man accused of insider trading who taunted the officials trying to put him in jail. This time the government won. Here’s the story from the Wall Street Journal:

More than two years after he first took to email to defiantly object to the government’s tactics in a broad insider-trading crackdown, John Kinnucan had little to say Tuesday, other than sorry.

Mr. Kinnucan, the Portland, Ore., research consultant who repeatedly taunted U.S. officials for more than a year, was sentenced to four years and three months in prison after admitting last year to passing on confidential information about technology firms to hedge funds and other clients.

The sentence for securities fraud caps a contentious chapter in the government’s insider-trading crackdown. Mr. Kinnucan, 55 years old, was first approached in October 2010 by two FBI agents who said his phone calls had been secretly recorded and they wanted him to cooperate. He responded by sending a brazen email to hedge-fund traders and other clients declaring that he was approached by “two fresh faced eager beavers,” a development first reported by The Wall Street Journal.

The New York Times went even further with some of the more colorful details of Kinnucan’s past and run ins with the government.

The case against Mr. Kinnucan has been among the more bizarre strands of the government’s broad crackdown on criminal activity at hedge funds. His name first emerged in November 2010, when The Wall Street Journal reported that the F.B.I. had tried to persuade him to record telephone calls with his clients, including SAC Capital Advisors. He rebuffed their request and boasted about his recalcitrance in an e-mail to his hedge fund customers.

“Today two fresh faced eager beavers from the F.B.I. showed up unannounced (obviously) on my doorstep thoroughly convinced that my clients have been trading on copious inside information,” the e-mail said. Mr. Kinnucan added that he “declined the young gentleman’s gracious offer to wear a wire and therefore ensnare you in their devious web.”

He then went on something of a publicity campaign, appearing on CNBC and writing a commentary for DealBook titled “Why I Chose Not to Wear a Wire.” In interviews and writings, he argued that he had not violated the law because the information he provided clients was publicly available.

As the investigation wore on, Mr. Kinnucan grew more belligerent. He made nearly 25 threatening telephone calls to F.B.I. agents and prosecutors, many of them laced with repeated references to sexual and other forms of violence, the government said.

Reuters had a few more details from the court appearance.

While in custody, Kinnucan has become “a shadow of himself,” his attorney, Jennifer Brown, told the court. She said he lost 35 pounds, was depressed and had not sought communication with his family, including two brothers and a sister who were in the courtroom on Tuesday.

“He is humbled and ashamed and has really taken in the message of what he’s done here,” Brown said.

(Judge Deborah) Batts recommended that Kinnucan serve his sentence at a prison south of Portland, Oregon, and be enrolled in an alcohol abuse program there.

The judge acknowledged letters written on Kinnucan’s behalf by his friends and family, noting that he has shown he can be kind. But she also noted the seriousness of insider trading and that obstruction of justice “cannot be tolerated,” despite his personal problems.

Kinnucan’s “sense of entitlement and anger were equally, if not more” to blame for his behavior, she said.

Bloomberg chose to lead with a similar angle about the judge’s rejection of Kinnucan’s plea for leniency.

Broadband Research LLC founder John Kinnucan, the expert-networker who refused to cooperate in a U.S. probe of insider trading before admitting to passing tips to hedge-fund clients, was sentenced to four years and three months in prison.

U.S. District Judge Deborah Batts in Manhattan today rejected the argument by Kinnucan’s lawyers that his actions stemmed from alcohol abuse triggered by the stress of being the target of a federal crackdown on insider trading. Defense lawyer Jennifer Brown also said Kinnucan suffered from an addiction to gambling in the stock market.

“It appears his sense of entitlement and anger are equally if not more to blame than gambling or alcohol addiction,” the judge said. “Insider trading is a serious crime and obstruction of justice by threatening personally the government authorities who are doing their jobs by investigating and prosecution insider trading cannot be tolerated.”

No matter which order you chose to put the details, they make for pretty good copy. And it’s probably a good idea to not threaten the agency that’s making a case against you.