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August 31, 2011

News and notes on the sentencing of Galleon insider traders

The new Bloomberg article, which is headlined "Ex-Galleon Trader Drimal Sentenced to 5 ½ Year Term for Insider Trading," reports not only on today's high-profile white-collar federal sentencing but also on related sentencings past and future. Here are the highlights:

Former Galleon Group LLC hedge fund trader Craig Drimal, who admitted taking part in an insider-trading scheme that stretched from technology firms to pharmaceutical companies, was sentenced to 5-1/2 years in prison.

Drimal, 55, pleaded guilty in April to six counts of conspiracy and securities fraud, admitting that he and others at Galleon traded on inside information obtained from lawyers working on transactions involving 3Com Corp. and Axcan Pharma Inc. Drimal said the tips came from Arthur Cutillo and Brien Santarlas, lawyers at Boston-based Ropes & Gray LLP....

Prosecutors had asked Sullivan, who handed down the 66-month term today in Manhattan, to sentence Drimal within federal guidelines, which Sullivan said call for a sentence of 57 to 71 months.  Drimal asked for a sentence below the guideline range.   In addition to the prison sentence, Sullivan ordered Drimal to forfeit $11 million and to serve three years of supervised release.

Cutillo, who pleaded guilty in January, was sentenced to 30 months in prison in June. Santarlas, who pleaded guilty and testified at the Goffer trial, hasn’t been sentenced....

Drimal met with government representatives after Federal Bureau of Investigation agents approached him before his arrest in November 2009 and sought his cooperation, the government said.  Drimal then contacted former Galleon Group trader Zvi Goffer and told him about the probe, against instructions, prosecutors said.  Drimal also lied to SEC personnel in July 2008 when they interviewed him about the reason why he bought Axcan stock, prosecutors said.

Goffer was convicted of all 14 counts against him in June, in the second trial of defendants charged in a nationwide investigation of insider trading at hedge funds. In a sentencing memorandum filed today, Goffer told a judge he’s a changed man and asked to be sentenced to less than the 10 years in prison called for under U.S. sentencing guidelines....

Goffer’s former boss, Galleon Group co-founder Raj Rajaratnam, was convicted of insider trading in May. Prosecutors are seeking a sentence of more than 24 years when Rajaratnam is sentenced Sept. 27.

August 31, 2011 at 10:35 PM | Permalink

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