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Enforcement Director Robert Khuzami
News Conference Remarks
The SEC's amended complaint, filed in federal court in Manhattan, names sources for the confidential insider tips to Rajaratnam and identifies others who traded on the basis of non-public information in a scheme that cumulatively generated more than $33 million in illicit gains. The SEC previously brought charges against Rajaratnam, Galleon and six others on October 16.
"When Wall Street professionals or others exploit inside information for an illegal tip-and-trade binge, they undermine the level playing field that is fundamental to our capital markets," said Robert Khuzami, Director of the Division of Enforcement. "These defendants thought the rules that apply to all investors did not apply to them, but the one rule they cannot avoid is the rule of law. Now they face financial penalties, industry bars, and possible jail time for their indiscretions."
The SEC's amended complaint additionally charges:
- Roomy Khan of Fort Lauderdale, Fla. - hedge fund consultant
- Obtained inside information about earnings announcements at Polycom and Google from unnamed sources, and about takeover announcements of Hilton and Kronos from Deep Shah. Khan then traded on such information and allegedly provided some or all of this information to Rajaratnam, who used it to trade on behalf of Galleon.
- Deep Shah of Mumbai, India - former analyst at Moody's
- Illegally tipped Khan about takeover announcements of Hilton and Kronos.
- Choo-Beng Lee of San Jose, Calif. - co-founder and managing partner at Far & Lee and Spherix Capital
- Obtained inside information about an earnings announcement at Google from the same unnamed source as Khan, and then shared it with Ali Far. Lee and Far then traded on the inside information on behalf of Far & Lee LLC.
- Ali Far of Saratoga, Calif. - co-founder and managing partner at Far & Lee and Spherix Capital
- Traded on inside information provided by Lee about an earnings announcement at Google.
- Far also obtained inside information about an earnings pre-announcement and earnings announcement at Atheros from Ali Hariri. Far then tipped Lee, and they both then traded on the inside information on behalf of a Spherix Capital fund.
- Far & Lee, LLC - California-based trading entity
- Involved in Far and Lee's insider trading.
- Spherix Capital - California-based hedge fund
- Involved in Far and Lee's insider trading.
- Ali Hariri of San Francisco, Calif. - vice president at Atheros Communications
- Tipped Far with inside information about an earnings pre-announcement and earnings announcement at Atheros.
- Gautham Shankar of New Canaan, Conn. - former proprietary trader at Schottenfeld
- Received inside information from an unnamed person identified in the SEC's complaint as Tipper X about earnings announcements at Google and takeover announcements at Hilton and Kronos. Shankar traded on this information and tipped some of it to his Schottenfeld colleagues.
- Zvi Goffer of New York, N.Y. - former proprietary trader at Schottenfeld
- Received inside information from Shankar about takeover announcements at Hilton and Kronos. Goffer then traded on this inside information.
- David Plate of New York, N.Y. - former proprietary trader at Schottenfeld
- Received inside information from Shankar about a takeover announcement at Kronos. Plate then traded on this inside information.
- Schottenfeld Group LLC - New York-based proprietary trading firm
- Involved in insider trading by several accounts including accounts managed by Shankar, Goffer and Plate.
- Steven Fortuna of Westwood, Mass. - co-founder and principal of S2 Capital
- Received inside information from Danielle Chiesi (charged on Oct. 16) relating to Akamai Technologies and then traded on that information on behalf of S2 Capital Management LP.
- S2 Capital Management LP - New York-based hedge fund
- Involved in Fortuna's insider trading.
The SEC's complaint charges each of the defendants with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and, except for Shah, Kumar, Moffat, Goffer and Plate, with violations of Section 17(a) of the Securities Act of 1933. The complaint seeks a final judgment permanently enjoining the defendants from future violations of the above provisions of the federal securities laws, ordering them to disgorge their ill-gotten gains plus prejudgment interest, and ordering them to pay financial penalties. The complaint also seeks to permanently prohibit Goel, Moffat and Hariri from acting as an officer or director of any registered public company.
The SEC acknowledges the ongoing assistance and cooperation of the U.S. Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation.
The SEC's investigation is continuing.
http://www.sec.gov/news/press/2009/2009-235.htm
CONTACT: David Rosenfeld, Associate Director, SEC's New York Regional Office Tel: +1 212 336 0153 Sanjay Wadhwa, Assistant Director, SEC's New York Regional Office Tel: +1 212 336 0181
((M2 Communications disclaims all liability for information provided within M2 PressWIRE. Data supplied by named party/parties. Further information on M2 PressWIRE can be obtained at http://www.presswire.net on the world wide web. Inquiries to info@m2.com.
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