Tuesday, 16 September 2014
Last updated 4 min ago
Jan 27 2011 | 1:23pm ET
Two former Galleon Group traders pleaded guilty to insider-trading charges yesterday with one saying he passed confidential tips on to Galleon founder Raj Rajaratnam.
Adam Smith and Michael Cardillo pleaded guilty to securities fraud and conspiracy in Manhattan federal court yesterday. Both men are cooperating with prosecutors and have agreed to testify in any Galleon case trials, including that of Rajaratnam, set to begin on Feb. 28.
Smith, for one, did not wait until then to implicate his former boss, telling the judge at his plea hearing, "I spoke with Raj Rajaratnam over the telephone in New York and communicated non-public information."
At his own hearing later yesterday, Cardillo said, "I knew at the time I did this that it was illegal and wrong, and I'm very sorry for having acted as I did."
Prosecutors say Smith was an intermediary for some of Rajaratnam's allegedly non-public information about Advanced Micro Devices' 2006 deal to acquire ATI Technology. Cardillo, who reportedly burst into tears at the office on the morning Rajaratnam was arrested, used confidential tips to trade six stocks, along with, it is alleged, Rajaratnam.
As part of Smith's plea deal, the former portfolio manager will not be charged with destroying records after Rajaratnam's arrest, or with alleged insider-trading he did last year.
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