LEGAL NEWSLINE

NEW YORK -- The CEO of a Denver-based hedge fund has been sentenced to a year and a day for insider trading.

The U.S. Attorney for the Southern District of New York announced that Drew K. Brownstein was sentenced Jan. 11 in Manhattan federal court for securities fraud arising from an insider trading scheme. He also received three years of supervised release, with six months home confinement and a special condition of community service, as well as, pay a forfeiture in the amount of $2,445,856, a $7,500 fine, and a $100 special assessment fee.

According to the announcement, Brownstein received material, non-public information about a pending acquisition of Mariner Energy Inc. by Apache Corporation. Brownstein traded on the inside information he received from his friend Drew Clayton Peterson who got it from his father, Mariner board member H. Clayton Peterson ("Clayton Peterson").

After the acquisition was publicly announced, Brownstein realized nearly $2.5 million in profits for himself, his hedge fund and others. He pleaded pled guilty to one count of securities fraud was sentenced by U.S. District Judge Robert P. Patterson, Jr.

"(Drew) Brownstein, along with others, took secret information obtained from the corporate boardroom and used it to make illegal stock trades," Manhattan U.S. Attorney Preet Bharara said. "The boardroom should be where investors' interests are protected, not a money trough for tippees of the wealthy and connected. We hope the message is finally getting through - that any financial advantage gained from illegal trading will be fleeting and it will not be worth the cost."

According to statements made during the guilty plea proceeding, representatives of Apache began confidential discussions with representatives of Mariner to acquire the company. On April 7, 2010, Mariner's board of directors convened a conference call to consider Apache's proposal to buy Mariner for cash and stock totaling $25 per share.

Mariner stock was trading at approximately $17 per share at the time.
On April 12, 2010, Mariner board member Clayton Peterson telephoned Drew Peterson and told him that Mariner would be acquired by another company within a week. Drew Peterson immediately telephoned Brownstein knowing that Mariner had not yet publicly announced the acquisition. He left a voicemail message indicating that Mariner would be acquired.

Peterson and Brownstein had a telephone conversation in which Peterson told him that Mariner would soon be acquired and that the source of the information was his father early in the morning on April 13, 2010. The same day, Brownstein used the insider information to purchase Mariner options for his hedge fund as well as Mariner stock and options for other individuals.

After more conversations with Peterson the following day, Brownstein purchased additional Mariner options for both the fund
and his personal account. On April 15, 2010, before the market opened, Apache and Mariner announced that Apache would acquire Mariner. Mariner's stock went from $18 per share to approximately $26 per share. Brownstein realized a gain of nearly $2.5 million.