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.”


In Depth

Why Ponzi Schemes Work: An In-Depth Look At The Allen Stanford Fraud

Dec 21 2014 | 10:30am ET

Texan Allen Stanford first appeared on the radars of financial regulators in 1997...

Lifestyle

Hedgie Funds US Squash Program

Dec 24 2014 | 8:46am ET

Squash, anyone?

Guest Contributor

EidoSearch’s Top Three Market Projections For 2015

Dec 23 2014 | 4:03am ET

It is that time of year again when prognosticators make their big market calls for...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.