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

Malik: The Science of Deal Sourcing 201

Aug 27 2015 | 5:35pm ET

Deal sourcing is understandably a hot topic among private equity firms because it...

Lifestyle

Rolling Art Advisors Marketing Collectible Car Fund As Uncorrelated Alternative

Aug 27 2015 | 6:47pm ET

A new fund is trying to provide investors with greater access to an emerging asset...

Guest Contributor

Agecroft Partners: Hedge Fund Industry Assets to increase $250B by Summer 2016

Aug 11 2015 | 11:29am ET

Assets will continue to flow into the hedge fund industry despite long-standing...

 

Editor's Note