Ex-Incremental Trader Offers Details Of Goffer Insider Trading Ring

May 25 2011 | 1:56am ET

A third cooperating witness in the second Galleon Group insider-trading case testified yesterday that he dealt in confidential information with former Galleon trader Zvi Goffer.

David Plate, who pleaded guilty last year, said that Goffer gave him and other prepaid cellular phones for use in passing and discussing insider tips. Plate said the prepaid phones would make it harder for the government to trace any activity.

"We were told that whenever we had even slightly sensitive information we should use them," Plate testified.

Plate, who worked with the three defendants—Goffer, his brother Emanuel and Michael Kimelman—at Goffer's hedge fund, Incremental Capital, said he threw the phone away after Galleon founder Raj Rajaratnam was arrested.

"It was evidence," he explained. Rajaratnam's October 2009 arrest came just weeks before the current defendants and Plate were picked up. Rajaratnam was convicted of insider-trading earlier this month.

Prior to Plate's testimony, the jury heard from David Slaine, a former portfolio manager at hedge fund Chelsey Capital, for the second day. Slaine, a former Galleon employee who pleaded guilty to insider-trading in a separate case, wore a wire as part of his cooperation agreement.

Prosecutors used their time with Slaine on the stand to play some of the more than two dozen recordings at the heart of their case. The defense sought to discredit Slaine by noting that he could expect leniency in sentencing for his cooperation.

Prosecutor Andrew Fish told U.S. District Judge Richard Sullivan that he expects to rest his case by the end of the week.

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