NEW YORK, JUNE 1 -- A federal judge sentenced a former director of Santa Fe International Corp. to an admittedly "token jail sentence" of two months today for buying stock with inside information about the concern's pending takeover.
In addition to the jail term, U.S. District Judge Whitman Knapp sentenced Darius N. Keaton to five years probation, 1,000 hours of community service and fined him a maximum $11,000.
"I certainly don't think you're going to learn anything in jail," Knapp told Keaton, 63, of Monterey, Calif., adding that the short jail term was "going to be harder on you than a lot of other people."
Keaton pleaded guilty last March to one count each of violating Securities and Exchange Commission regulations and of wire fraud. He could have been sentenced to a maximum 10 years in prison.
Keaton's attorney, Milton Gould, argued passionately before Knapp that his client should not go to prison because "this isn't going to keep any of the others from the misuse of insider information."
"The present widespread mania" about the Wall Street arbitrageurs like Dennis Levine and Ivan F. Boesky swapping inside information to make millions in illegal profits had no bearing on Keaton's case, said Gould, adding "there's no comparison between this and what we have been reading about over the past year."
Keaton previously admitted that he used his corporate position to make more than $274,000 in illegal profits in 1981 with inside information about the proposed acquisition of Alhambra, Calif.-based Santa Fe International by Kuwait Petroleum Co.
The $2 billion takeover increased stock values from about $30 a share to $51.
Keaton bought 10,000 Santa Fe shares through Switzerland while he was a board member and before the acquisition was announced publicly.
Federal law forbids corporate executives, investment bankers and others with access to nonpublic information from using it to trade in securities for their own profit.