Tuesday, 25 October 2016
Last updated 5 min ago
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.