Hedge Fund Trader Wore Wire In Galleon Probe

Mar 10 2010 | 1:25pm ET

A second former Galleon Group trader wore a wire as part of the insider-trading probe that snared Galleon founder Raj Rajaratnam.

Prosecutors equipped several cooperating witness with recording devices during the investigation, The Wall Street Journal reports. One of them was Franz Tudor, who wore the wire last year after Rajaratnam’s arrest in October, a former trader at Galleon who also worked at two other hedge funds with staffers that have been charged in the case.

Another former Galleon trader, David Slaine, has previously been identified as a government mole in the case. According to the Journal, Brien Santarlas, a lawyer who has pleaded guilty to his role in the insider-trading scandal, also recorded at least one conversation with a fellow lawyer then also at Ropes & Gray, Arthur Cutillo. Cutillo is among the nine people—out of the 21 charged—who have pleaded not guilty in the case.

Ten others, including Tudor, has pleaded guilty or agreed to do so, most in exchange for a deal with prosecutors. Tudor will plead to conspiracy and has agreed to testify if called.

The targets of Tudor’s taped conversations were Zvi Goffer and Michael Kimelman. The former, also once a Galleon employee, allegedly ran half of the insider-trading ring. Both men worked with Tudor at hedge fund Incremental Capital; both have pleaded not guilty in the case.

After leaving Galleon, Tudor worked at hedge fund Schottenfeld Group before moving on to Incremental.

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