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

U.S. Treasury Moves on Reinsurance Loophole

Apr 24 2015 | 5:11pm ET

The U.S. Treasury Department has released proposed rules aimed at limiting the ability...

Lifestyle

Puerto Rico Woos The Rich But So Far Gains Little

Apr 17 2015 | 2:45am ET

Hedge fund manager Rob Rill grins. He has just had word that U.S. financial regulators...

Guest Contributor

Starting a ‘40 Act Fund Family? Don’t Forget Your Board

Apr 30 2015 | 7:18am ET

The convergence of the hedge fund and mutual fund worlds continues unabated, as...

 

Editor's Note