A former Goldman Sachs analyst has been sentenced to nearly five years in prison after leading one of the biggest insider-trading rings that siphoned off nearly $7 million (£3.5 million) by using illegal tips on mergers.

Eugene Plotkin, a former associate in the fixed-income research division, played a central role in a multimillion-dollar trading scam that relied on tips from three sources: a former Merrill Lynch analyst, advance copies of Business Week stolen from the magazine’s printing plant, and a grand juror.

Mr Plotkin, 28, pleaded guilty to conspiracy to commit securities fraud and eight counts of insider trading. He was ordered to serve four years and nine months, pay a fine of $10,000 and forfeit up to $6.7 million – the amount of the scam’s illegal profits.

The case emerged in August 2005, when regulators became suspicious of the options trading profits of a retired 63-year-old Croatian underwear seamstress - the aunt of David Pajcin, a fellow Goldman analyst and co-conspirator who also pleaded guilty and is awaiting sentencing.

The court in New York heard on Thursday how Mr Plotkin had introduced Mr Pajcin to his college friend Stanislav Shpigelman, a former Merrill M&A analyst, at a Russian sauna in Manhattan in 2004. The pair persuaded him to give them tip-offs about upcoming mega-mergers, including Procter & Gamble’s acquisition of Gillette and adidas’s deal to buy Reebok, for a cut of the profits. Mr Shpigelman was sentenced to three years in prison last year after pleading guilty to conspiracy to commit insider trading.

The men also bribed two men to steal advance copies of Business Week and pass on the names of stocks mentioned in the magazine’s market-moving Inside Wall Street column.

In a third plot, they enticed Jason Smith, a high school friend of Mr Pajcin who served on a grand jury in a New Jersey investigation into the US drug company Bristol-Myers, to pass on secret inside information. Smith has been sentenced to 33 months’ prison.

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