Former Carlyle Group consultant gets probation for trading on inside tips

Ex-Carlyle Consultant Gets Probation for Insider Trading

By Christie Smythe – Aug 10, 2012 5:11 PM GMT+0100

Former A.T. Kearney Inc. partner Sherif Mityas was sentenced to three years of probation for trading on inside tips he learned while serving as a consultant to private-equity firm the Carlyle Group, according to a spokesman for federal prosecutors.

Mityas, who also previously served as president and chief executive officer for now-liquidated Movie Gallery Inc., was sentenced today at a hearing in Brooklyn, New York, federal court, according to Robert Nardoza, a spokesman for U.S. Attorney Loretta Lynch. He wasn’t ordered to pay any financial penalties, Nardoza said in an e-mail.

The former consultant pleaded guilty in March to one count of securities fraud for making trades in the stock of vitamin maker NBTY Inc. based on nonpublic information. As a partner at Chicago-based A.T. Kearney, Mityas had learned Carlyle, a client, was planning to buy the vitamin company in 2010. The $3.8 billion deal was announced in July 2010.

By timing his purchases and sales of the vitamin company’s stock with the acquisition announcement, Mityas made $25,871 in trading profits, prosecutors alleged.

In a memorandum filed with the court, Mityas’s lawyer, Eric Chase, asked that his client be sentenced to no prison time, only to three years of probation, saying that crime was out of his character.
‘Family Man’

“Mr. Mityas’s history and characteristics along with the nature and circumstances of the offense paint a picture of a responsible, middle-aged family man whose mounting financial stressors led him to make this one foray into criminal conduct, Chase said in the memorandum, filed on July 24.

Assistant U.S. Attorney David C. Woll Jr. told the judge in a letter filed Aug. 7 that the government believed a sentence outside of an advisory range of 10 to 16 months in prison might be appropriate, given the circumstances.

‘‘The defendant’s criminal conduct was serious,” Woll said in the letter. “However, the defendant has no prior criminal history and his criminal behavior appears to be aberrant.”

Mityas also faced a civil suit by the U.S. Securities and Exchange Commission over the NBTY trades. The former consultant consented to a $78,237 judgment in that case, according to court filings.

The criminal case is U.S. v. Mityas, 1:12-cr-00133, U.S. District Court, Eastern District of New York (Brooklyn).

The civil case is Securities and Exchange Commission v. Mityas, 1:12-cv-01281, U.S. District Court, Eastern District of New York (Brooklyn).

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