Three former securities traders were convicted on Monday on all counts of fraud and conspiracy to commit insider trading on pending mergers, in another victory for prosecutors in their probe of suspicious trading on Wall Street.

Brothers Zvi Goffer and Emanuel Goffer and a third trader, Michael Kimelman, their former partner at trading firm Incremental Capital LLC, chose to go to trial when dozens of other defendants in the broad probe have pleaded guilty.

The case is part of a wide-ranging insider trading investigation focused on hedge funds and traders, a probe marked by the use of FBI wiretaps.

The central defendant in the government's probe is Galleon Group hedge fund founder Raj Rajaratnam, who was convicted last month of insider-related charges, also in Manhattan federal court.

With Monday's verdicts, every defendant who was arrested in October and November 2009 in the Galleon probe has been convicted. One man remains at large.

A jury convicted Zvi Goffer, 34, a former Galleon Group trader, of two counts of conspiracy and 12 counts of securities fraud for activities between 2007 and 2009.

Prosecutors said he was a ringleader who paid tens of thousands of dollars in bribes to two Ropes & Gray lawyers to learn what corporate deals the law firm was working on. The lawyers, Arthur Cutillo and Brien Santarlas, have pleaded guilty to criminal charges.

Emanuel Goffer, 32, was convicted on one conspiracy charge and two securities fraud counts. Kimelman, 40, was found guilty of conspiracy and two counts of securities fraud. Kimelman had rejected a plea deal soon before the trial began on May 16.

We will continue to work tirelessly with our partners at the FBI to root out corporate corruption on Wall Street and to hold privileged professionals who gallop over the line accountable for their actions, Manhattan U.S. Attorney Preet Bharara said in a statement.

APPEALS PLANNED

The jury, which included a secretary, a doctor and an acting teacher, decided in five days of deliberations that the men traded illegally on advance knowledge about pending mergers involving computer network equipment maker 3Com Corp and Canadian drug company Axcan Pharma Inc.

When the jury forewoman stood in court Monday morning and pronounced the verdict, Zvi Goffer looked down and shook his head, while his wife suppressed sobs from a back bench.

Later, as U.S. District Judge Richard Sullivan met with the jurors in a separate room, Kimelman and the Goffers huddled with their families, looking ashen and fighting back tears.

This was a very, very difficult case, David Pettus, one of Zvi Goffer's lawyers, said outside the courthouse. We will appeal and we will do the very best we can for him at sentencing.

The judge set Zvi Goffer's sentencing for September 21. The other two men will be sentenced on October 7.

Michael Ross, a lawyer for Emanuel Goffer, declined to comment.

Kimelman's lawyer, Michael Sommer, said he was enormously disappointed ... as we believed the evidence clearly showed that Mr. Kimelman had not engaged in any insider trading.

Sommer said he will pursue avenues of appeal.

The convictions carry a maximum possible prison sentence of 25 years for each man. All three are free on bail pending sentencing.

On May 11, another jury in the same courthouse convicted Rajaratnam, 53, who before his late 2009 arrest had built Galleon into one of the biggest hedge funds and became a billionaire. He is scheduled to be sentenced on July 29.

Zvi Goffer worked at Galleon for about seven months in 2008.

DISPOSABLE PHONES, WIRETAPS

Prosecutors said the Goffers destroyed evidence by throwing away their mobile phones. Kimelman did not use a disposable phone but tried to cover up his activity in other ways, the government said.

In both the Rajaratnam trial and the Goffer trial, prosecutors relied heavily on dozens of secretly recorded phone conversations of the defendants and the testimony of some of their former associates.

Every generation or so, there are lessons to be taught about insider trading, said Brian Quinn, assistant professor of law at Boston College.

It seems pretty clear, when you read the contents of the wiretaps, that people think they are smarter than the government, but don't seem all that afraid, and buy cell phones from a Best Buy so they can't be traced, Quinn said.

It is incredible to me every time I read these transcripts that people realize they are violating the law, but think no one is watching, he said.

The case is USA v Zvi Goffer et al, U.S. District Court for the Southern District of New York, No. 10-00056.

In the same courthouse, another trial is under way in a separate branch of the insider trading investigation focused on expert networking firms that use consultants to match industry experts with money managers.

Winifred Jiau, a former technology consultant at Primary Global Research, went on trial on June 1, accused of illegally leaking company earnings to hedge funds before they were publicly announced in exchange for payment.

(Additional reporting by Basil Katz and Jonathan Stempel; Editing by Martha Graybow, Maureen Bavdek and Tim Dobbyn)

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