Galleon Traders Plead Guilty, To Testify Against Rajaratnam

Jan 27 2011 | 2:23pm 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.


In Depth

Q&A: Decathlon Capital On Revenue-Based Alternative Lending

Oct 30 2017 | 3:49pm ET

The explosion in private credit activity since the end of the financial crisis is...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Saxby: Not All EBITDA Is Created Equal

Nov 30 2017 | 8:02pm ET

Record levels of dry powder are driving competition among private equity firms to...

 

From the current issue of