Two Ex-Galleon Employees Plead Guilty

Jan 26 2011 | 12:46pm ET

Prosecutors are set to win two more guilty pleas in the Galleon Group insider-trading case—and two more possible witnesses against Galleon founder Raj Rajaratnam—today.

Michael Cardillo and Adam Smith will be the 18th and 19th people to plead guilty in the case; neither has previously been charged. Both, former Galleon employees, are cooperating with the investigation.

Smith, who has also been sued by the Securities and Exchange Commission, entered his plea earlier today in Manhattan federal court; Cardillo, previously a confidential witness in the case, will appear later today.

“I spoke with Raj Rajaratnam over the telephone in New York and communicated non-public information,” Smith said this morning.

According to the SEC, Smith, who last year planned to launch a new hedge fund with a pair of other Galleon traders, “reached out” to an investment banker for information about ATI Technologies, which was involved in confidential talks about an acquisition with Advanced Micro Devices.

“Smith caused certain Galleon funds that he managed to trade on the basis of the material non-public information he received from the investment bank source,” the SEC said in its complaint. “Upon receipt of the information, Smith substantially increased the size of an existing ATI long position that the Galleon funds he managed had in place.”

Rajaratnam is set to face trial late next month. Another former Galleon trader, Zvi Goffer, who allegedly headed one of the two interlocking insider-trading circles in the case, will go on trial on May 9.


In Depth

'Smart Beta' Funds In Regulators' Sights, Hedgies May Be Next

Mar 26 2015 | 11:11am ET

Funds that mimic strategies used by active managers for a fraction of the cost could...

Lifestyle

Study: Both Marriage and Divorce Lead to Negative Hedge Fund Performance

Mar 25 2015 | 6:51pm ET

Trouble at home leads to trouble in the market for fund managers, according to researchers...

Guest Contributor

Concerned About Your HFT Exposure? Hedge It!

Mar 26 2015 | 1:06pm ET

High-frequency trading has been a persistent storyline for several years. The trading...

 

Sponsored Content

    Mar 9 2015 | 6:35am ET

    Kelly RodriquesKelly RodriquesAs more investors look to diversify, many are beginning to use retirement funds to invest in alternative assets such as private equity and real estate. Kelly Rodriques, CEO & President of PENSCO Trust Company, explains how companies can connect with those looking to use their retirement accounts in a different way. Read more…

Editor's Note