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

OmniQuest Capital: Why Funds of Hedge Funds Work

Aug 11 2016 | 4:47pm ET

There have been few sectors of the alternative investment universe under as much...

Lifestyle

Kiawah: Island Reversal

Aug 24 2016 | 9:59pm ET

Looking for real estate investments but the typical real estate fare isn’t cutting...

Guest Contributor

Old Hill Partners: Embrace Illiquidity

Aug 9 2016 | 2:39pm ET

The age-old financial concept that higher yields are the result of higher risk and...