Tag: Galleon Group

DOJ puts three more Wall Street Wizards away for insider trading

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Zvi Goffer – nicknamed “octopussy”

Three former securities traders were convicted on Monday on all counts of fraud and conspiracy to commit insider trading on pending mergers, in another victory for prosecutors in their probe of suspicious trading on Wall Street.

Brothers Zvi Goffer and Emanuel Goffer and a third trader, Michael Kimelman, their former partner at trading firm Incremental Capital LLC, chose to go to trial when dozens of other defendants in the broad probe have pleaded guilty…

The central defendant in the government’s probe is Galleon Group hedge fund founder Raj Rajaratnam, who was convicted last month of insider-related charges, also in Manhattan federal court.

With Monday’s verdicts, every defendant who was arrested in October and November 2009 in the Galleon probe has been convicted. One man remains at large.

A jury convicted Zvi Goffer, 34, a former Galleon Group trader, of two counts of conspiracy and 12 counts of securities fraud for activities between 2007 and 2009.

Prosecutors said he was a ringleader who paid tens of thousands of dollars in bribes to two Ropes & Gray lawyers to learn what corporate deals the law firm was working on. The lawyers, Arthur Cutillo and Brien Santarlas, have pleaded guilty to criminal charges.

Emanuel Goffer, 32, was convicted on one conspiracy charge and two securities fraud counts. Michael Kimelman, 40, was found guilty of conspiracy and two counts of securities fraud. Kimelman had rejected a plea deal soon before the trial began on May 16.

“We will continue to work tirelessly with our partners at the FBI to root out corporate corruption on Wall Street and to hold privileged professionals who gallop over the line accountable for their actions,” Manhattan U.S. Attorney Preet Bharara said in a statement…

Every generation or so, there are lessons to be taught about insider trading, said Brian Quinn, assistant professor of law at Boston College…

“It is incredible to me every time I read these transcripts that people realize they are violating the law, but think no one is watching,” he said.

During most of the Bush years and probably a chunk of those preceding you pretty much could count on little oversight, even less enforcement and a slap on the wrist from the SEC and the Department of Justice.

No one was watching. Or listening.

Billionaire head of hedge fund arrested for fraud, insider trading

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Daylife/Reuters Pictures used by permission

By all appearances, Raj Rajaratnam was a self-made billionaire, having built Galleon Group into a giant hedge fund with a specialty in technology companies.

But prosecutors said on Friday that he had profited not from his trading genius but from his Rolodex, and they arrested him on charges of conspiracy and securities fraud in what they called the biggest insider trading scheme ever involving a hedge fund.

In all, six people were arrested, accused by prosecutors and the Securities and Exchange Commission of earning more than $20 million from illegal trading in companies like Google, Akamai and Hilton Hotels over nearly three years.

Mr. Rajaratnam is accused of tapping a vast network of informants across a swath of corporate America: a senior official at I.B.M. considered a contender for the top job at that firm; executives of Intel and the consulting firm McKinsey & Company; two former Bear Stearns employees who had moved to a hedge fund, New Castle Partners; and an analyst at Moody’s Investors Service.

While trading secrets, though, one crucial piece of information was not shared — several of the phones were tapped.

The wiretaps were made with the help of an unnamed cooperating witness, a former Galleon employee who was said to ply Mr. Rajaratnam with information originally to land a job. The witness, who began cooperating in November 2007, has agreed to plead guilty in the hopes of receiving a lesser sentence.

“This case should serve as a wake-up call for Wall Street,” Preet Bharara, the United States attorney for the Southern District of New York, said at a news conference on Friday. He added that the investigation was continuing.

Wake-up call my Sweet Aunt Josephine’s rosy cheeks! RTFA. It’s like cleaning out the White House and leaving behind a thoroughly corrupt Congress.

The SEC was pressed into dumping a few bad apples like Madoff – and now Rajaratnam – who sit in the midst of a network of corruption and deceit that remains without thoroughgoing regulation or oversight.