08/02/2012 05:46 pm ET Updated Oct 02, 2012

Anthony Scolaro, Ex-Diamondback Hedge Fund Manager, Avoids Jail Time For Insider Trading

By Basil Katz

NEW YORK, Aug 2 (Reuters) - A U.S. judge on Thursday sentenced a former portfolio manager at the Diamondback Capital Management hedge fund to three years probation, al lowing another defendant who cooperated in the government's sprawling insider trading probe to avoid prison.

Anthony Scolaro, 51, pleaded guilty in December 2010 to trading illegally on a tip that Canada's Axcan Pharma Inc would be taken private by TPG Capital.

At Thursday's sentencing hearing, U.S. District Judge William Pauley said insider trading was "a crime motivated by avarice and calculation."

But the judge did not impose prison time after federal prosecutor Antonia Apps told him that Scolaro had provided "substantial information to the government in numerous investigations."

Pauley ordered Scolaro to pay a $150,000 fine as well as $125,890 in forfeiture to the government. Scolaro had agreed to pay roughly $200,000 in a civil settlement last August with the U.S. Securities and Exchange Commission.

Federal prosecutors have also accused another former Diamondback employee, Todd Newman, of insider trading. He and two others face an October trial. [ID: nL2E8HSJD8]

Stamford, Connecticut-based Diamondback has not been accused of any wrongdoing and has also settled SEC civil charges.

"Nonetheless, we are disappointed that Scolaro did not apologize to Diamondback's investors, whose trust he abused in committing his crimes," Diamondback said in a statement.

The case is USA v. Anthony Scolaro, U.S. District Court for the Southern District of New York, No. 11-cr-00429.