Galleon Mole Pleads Guilty In Insider-Trading In Separate Case

Feb 3 2010 | 2:11pm ET

A former hedge fund manager and admitted insider-trader wore a wire as part of the Galleon Group probe, linking the two largest insider-trading cases in U.S. history.

David Slaine, a former trader for Galleon, pleaded guilty in December to conspiracy and securities fraud charges stemming from a 2007 that ensnared 13 people. That was the largest insider-trading case ever until last year, when Galleon founder Raj Rajaratnam and 20 others were charged—with an assist from Slaine.

Slaine, who has been cooperating with the authorities for more than a year, wore a wire that produced some of the huge number of tapes and wiretaps that are at the heart of the Galleon case. He has also accused Craig Drimal, a former Galleon employee who pleaded not guilty to fraud charges this week, of trading on non-public information.

Slaine pleaded guilty in December to trading on insider tips about stock ratings changes by UBS Securities while at Chelsey Capital in 2002, earning the hedge fund more than $3 million. He also netted some $500,000 trading in his own account. The U.S. Securities and Exchange Commission filed a civil suit against Slaine yesterday.

Slaine’s link to the Chelsey insider-trading case was not known until his guilty plea was unsealed yesterday. He was identified as a cooperating witness in the Galleon case by defendant Zvi Goffer’s lawyer on Jan. 29.

“Slaine knew, or should have known, that this information was being tipped in breach of duty to UBS,” the SEC said.

Chelsey is also where Mark Lenowitz and Eric Franklin, who have also been charged in the 2007 case, worked. In addition to his stints at Galleon and Chelsey, Slaine once worked at Morgan Stanley and CJS Capital, a hedge fund he managed with two former SAC Capital Advisors employees.

Slaine faces up to 25 years in prison at his sentencing on June 25.


In Depth

Q&A: Filippo Pignatti Morano On The Ultimate Alternative Investment...Classic Cars

Jan 29 2015 | 12:37pm ET

In 2011, Filippo Pignatti Morano launched a fund to invest in classic cars. FINalternatives...

Lifestyle

Looking For A Hedge Fund Manager? Try Davos

Jan 28 2015 | 8:48am ET

Davos, Switzerland seems to have become the hedge fund capital of the world—at...

Guest Contributor

Five Tips For Successfully Marketing Your Hedge Fund

Jan 30 2015 | 9:14am ET

When it comes to the hedge fund industry, the notion of “build it and it will...

 

Editor's Note