MANHATTAN (CN) - The CEO of a Denver-based hedge fund was sentenced Wednesday to a year and a day in federal prison for inside trading that brought nearly $2.5 million in illicit profits.
Drew "Bo" Brownstein traded on inside information about Apache Corp.'s pending acquisition of Mariner Energy. He got the tip from his friend Drew Clayton Peterson, who got it from his father, Mariner board member H. Clayton Peterson.
Both Petersons pleaded guilty to federal charges in August 2011. Clayton Peterson was sentenced to 3 months of home confinement, 2 years probation, and fined $400,000. Drew Peterson will be sentenced on April 11.
After the corporate acquisition was announced, Brownstein, his hedge fund, "and others," made nearly $2.5 million when Mariner's share price rose, the U.S. Attorney's Office said in a statement.
Mariner shares were trading at $17 when Apache offered to buy the company for $25 a share. Clayton Peterson told his son about the offer, and Drew Peterson told Brownstein, who bought Mariner shares for his hedge fund and for clients. When the deal was announced publicly two days later, Mariner shares shot up to $26.
Brownstein also was ordered to forfeit $2,445,856 and pay $7,600 in fines.
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