Jury convicts 3 in NYC hedge fund trial

Former Galleon Group Llc hedge fund trader Zvi Goffer was convicted on all counts by a federal jury in Manhattan Monday in the second trial to result from the U.S. government's nationwide crackdown on insider trading.

Goffer's brother Emanuel and Michael Kimelman were also found guilty of conspiracy and securities fraud by a jury that began deliberations June 2. The verdict comes about a month after Goffer's boss, Galleon co-founder Raj Rajaratnam, was found guilty in the same courthouse of directing the biggest hedge fund insider trading scheme in history.

Goffer, 34, his brother and Kimelman were charged with using tips from two lawyers to profit on trades in 3Com Corp., Axcan Pharma Inc., Kronos Inc. and Hilton Hotels Corp. Jurors heard recordings of wiretapped phone calls and testimony from witnesses who pleaded guilty in the case and were cooperating with the government.

Prosecutors said the three men, who co-founded Incremental Capital Llc after Zvi Goffer was fired by New York-based Galleon in 2008, used information that the lawyers, then working at the Boston-based law firm Ropes & Gray Llp, learned about pending acquisitions through their work there.

The U.S. Securities and Exchange Commission claimed in a related lawsuit that the alleged scheme resulted in at least $20 million in illicit profits. Fourteen people were charged in the purported insider-trading ring. Ten pleaded guilty, and one is a fugitive.

Zvi Goffer's lawyers argued their client sometimes bluffed about having inside information to impress other Wall Street traders. Lawyers for Emanuel Goffer and Kimelman said their clients weren't part of any alleged conspiracy with Zvi Goffer.

They face up to 20 years in prison on the most serious charges. All three remain free on bond pending sentencing.