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Insider-Trading Case Grows with Arrests
The Galleon case just keeps growing.
The Justice Department has charged 14 more people in the insider-trading case that led to the closure of Galleon Capital and embarrassment at some of America’s most prominent companies. Seven of those defendants had been taken into custody in the New York area this morning.
Lawyers, a former Moody's analyst, an executive at Atheros Communications, and the founder of trading firm Incremental Capital were among those charged.
Five of the 14 have already pleaded guilty, including Roomy Khan, the tipster who let authorities in on the web of alleged insider trades surrounding Galleon founder Raj Rajaratnam.
These arrests follow the arrest last month of Galleon founder Rajaratnam and five others, including IBM and Intel executives, in a $20 million insider-trading scheme. Galleon, which once had $7 billion under management, is winding down its operations as a result of the case.
Those charged included: Zvi Goffer, the founder of Incremental Capital and a former employee at Galleon and Schottenfeld Group; Arthur Cutillo, an intellectual property lawyer at Ropes & Gray LLP; Jason Goldfarb, another New York attorney; Craig Drimal, who worked in Galleon's office space, but wasn't employed by the firm; Atheros executive Ali Hariri; and several individuals associated with Incremental Capital—Emanuel Goffer, Michael Kimelman, and David Plate.
“Good work,” said Columbia University law professor John Coffee. “This is probably the most far-reaching insider-trading case since the Drexel and Boesky days, and people have suspected this for a long time.”
Coffee said what would be most interesting to see as the case unfolds is whether the insider-trading network touched other high-profile companies or hedge funds.
