Galleon Tipster Blames Self, Friendship For Troubles

Jan 11 2011 | 5:54am ET

Ali Hariri, one of the tipsters in the Galleon Group insider-trading case, was manipulated by the hedge fund manager he passed confidential information on to, he says.

Hariri, a former vice president at Atheros Communications, is set to begin an 18-month prison sentence for his part in the Galleon scheme. In an interview with Bloomberg News, he said he gave information about Atheros’s fourth quarter 2008 earnings to Ali Far of Spherix Capital.

“I looked at him not as a hedge fund,” Hariri said of his fellow Iranian. “I looked at him as a friend a mentor,” one he even sounded out before proposing to his now-wife.

“He was a very intelligent person,” Hariri said. “He gained my trust.”

But Hariri made clear he wasn’t looking to pass the buck. “I had a big mouth and it was absolutely wrong,” he said. “I’m not blaming him. It was my own mistake.”

“When you’re in Silicon Valley and when you’re a techie working on a product, the furthest thing from your mind is insider trading,” he added. “You say something. You don’t think about it. A year later, the FBI knocks on your door.”

Still, Hariri said he “pled guilty because I was guilty.”

Far co-managed Spherix with former SAC Capital Advisors trader Richard Choo-Beng Lee. Both men are cooperating with the investigation.

Hariri told Bloomberg he briefly met Lee through Far, as well as Galleon Group founder Raj Rajaratnam on three occasions. Prosecutors allege that Rajaratnam was at the head of one of two intersecting insider-trading rings in the case; Rajaratnam has pleaded not guilty.

For his part, Hariri said he found Rajaratnam “very polite.”

In addition to jail time, Hariri was ordered to pay $52,500 in fines and restitution. While Hariri, called by his lawyer “the least culpable” of the 21 Galleon defendants, did not profit from Far’s illicit trading, he did make $2,500 trading on tips passed to him by Far.

“On a grand scale, I was a spoke on the wheel,” Hariri said. “Somebody told me, ‘you’re not even the ant on the elephant’s ass,’ but when the elephant gets fumigated, the ant dies, too.”

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