In the aftermath of the a fresh series of arrests against individuals allegedly involved in a $20m insider trading ring, the SEC released details of an amended complaint on Thursday.
Those featured in the complaint are a motley crew of hedgies, analysts, traders and attorneys, many of whom stand accused of participating in a scheme in which Raj Rajaratnam and his Galleon hedge fund figure prominently. But the SEC has also broadened its inquiry beyond the scope of mere Galleon.
Here are the biogs of and accusations against those added to the SEC’s complaint - which is separate from but related to the criminal complaint - on Thursday:
* Roomy Khan of Fort Lauderdale, Fla. - hedge fund consultant
o 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
o 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
o 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
o Traded on inside information provided by Lee about an earnings announcement at Google.
o 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
o Involved in Far and Lee’s insider trading.
* Spherix Capital - California-based hedge fund
o Involved in Far and Lee’s insider trading.
* Ali Hariri of San Francisco, Calif. - vice president at Atheros Communications
o 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
o 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
o 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
o Received inside information from Shankar about a takeover announcement at Kronos. Plate then traded on this inside information.
[According to the SEC, “Goffer was known as “the Octopussy” within the insider trading ring due to his reputation for having his arms in so many sources of inside information”]
* Schottenfeld Group LLC - New York-based proprietary trading firm
o 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
o 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
o Involved in Fortuna’s insider trading.
Separately, the SEC charged a pair of lawyers, six Wall Street traders and a proprietary trading firm in a broad expansion of the case:
The SEC alleges that Arthur J. Cutillo, an attorney in the New York office of international law firm Ropes & Gray LLP, had access to confidential information about at least four major proposed corporate transactions in which his firm’s clients participated.
Through his friend and fellow attorney Jason Goldfarb, Cutillo tipped this inside information to Zvi Goffer, a proprietary trader at New York-based firm Schottenfeld Group. Goffer promptly tipped four traders at three different broker-dealer firms and another professional trader Craig Drimal, who each then traded either for their own account or their firm’s proprietary accounts.
And how’s this for colourful behaviour:
Cutillo, Goldfarb, and Goffer at times used disposable cell phones in an attempt to conceal the scheme. For example, prior to the announcement of one acquisition, Goffer gave one of his tippees a disposable cell phone that had two programmed phone numbers labeled “you” and “me.” After the announcement, Goffer destroyed the disposable cell phone by removing the SIM card, biting it, and breaking the phone in half, throwing away half of the phone and instructing his tippee to dispose of the other half.
The SEC also charged:
Emanuel Goffer of New York, N.Y. - formerly a registered representative at the broker-dealer Spectrum Trading LLC, and currently associated with the broker-dealer Echotrade.
Michael A. Kimelman of Larchmont, N.Y. - formerly a trader at Lighthouse Financial Group LLC, an investment bank and broker-dealer, and currently a registered representative at Echotrade.
David Plate of New York, N.Y. - formerly a registered representative at Schottenfeld and currently a registered representative at the broker-dealer G-2 Trading LLC.
Gautham Shankar of New Canaan, Conn. - formerly a registered representative at Schottenfeld.
And, we are told, this is still just the tip of the iceberg as far as revelations and accusations go.
