Five Galleon Defendants Seek Case Dismissal

Nov 9 2010 | 3:53pm ET

Five defendants in the Galleon Group insider-trading case have asked a judge to dismiss the charges against them.

The five were allegedly part of a second insider-trading ring interlocking with that allegedly headed by Galleon founder Raj Rajaratnam and including former Galleon trader and Incremental Capital founder Zvi Goffer. The five men were arrested a month after Rajaratnam and have all pleaded not guilty.

According to their dismissal bid, federal prosecutors' "convoluted theory” of insider trading isn't backed by any evidence. And what evidence the government does present, the five say, fails to meet the definition of insider trading.

"The material information in question (that certain companies were acquisition targets and that certain companies were potential buyers was already public," Goffer's brief claims. "The arguably non-public information (that Ropes & Gray was representing a long-standing client in making a potential bid) was not material."

Even the one potential instance of material, non-public information is flawed, Goffer's legal team says, as it allegedly traveled to the defendants via Gautham Shankar, a former trader at Schottenfeld Group, where Goffer also formerly worked, from an unidentified roommate of former Moody's Corp. analyst Deep Shah, the only fugitive in the case. But Goffer says there's no evidence that Shankar knew the information was confidential.

Prosecutors allege that Goffer ran a $20 million insider-trading ring, giving sources prepaid cellular phones to call in their tips, paying those sources for the insider information. Much of the information came from the law firm of Ropes & Gray and from Shankar, who has pleaded guilty and is cooperating with prosecutors.

In addition to Goffer, the others seeking dismissal are Goffer's brother, Emanuel, and Michael Kimelman, both of Incremental, and Craig Drimal, a former co-worker of Goffer's at Galleon. Jason Goldfarb, a lawyer at Ropes & Gray, has also asked the judge to toss the case.


In Depth

Star Fund Managers Battered By Rocky Ride In Yields, Currencies

May 28 2015 | 6:05am ET

Some of the biggest names in the investment world have been whipsawed by the recent...

Lifestyle

Yale Receives $150 Million Gift from Blackstone’s Schwarzman

May 12 2015 | 12:10am ET

Yale University announced it has received a $150 million gift from Blackstone Group...

Guest Contributor

The Road To Tax Alpha

May 28 2015 | 5:36am ET

Tax-related alerts are increasingly helping investment managers harvest tax alpha...

 

Sponsored Content

Editor's Note