An unexpected twist in the Galleon insider trading case.

From Reuters on Tuesday evening:

- SEC FILES CIVIL INSIDER TRADING CHARGES AGAINST DAVID SLAINE, A FORMER HEDGE FUND PORTFOLIO MANAGER – NY COURT DOCUMENT

- SLAINE ALLEGEDLY USED INSIDE INFORMATION FROM MITCHEL GUTTENBERG, A FORMER UBS SECURITIES LLC EXECUTIVE – SEC COMPLAINT

- SLAINE’S PERSONAL PROFITS FROM THE PURPORTED INSIDER TRADING IN 2002 WERE $500,000 – SEC

Now this is interesting because according to the Wall Street Journal at least, Slain was ‘Mr Wiretap’, and a key witness in the biggest insider-trading case in two decades.

From the WSJ:

Using extensive contacts developed over a 27-year Wall Street career, Mr. Slaine has provided leads on possible insider trading by others not yet implicated in a sprawling case involving hedge fund Galleon Group, people familiar with the matter say. That case has rocked Wall Street and Silicon Valley and raised questions about the integrity of the nation’s financial markets. Mr. Slaine’s identity as an informant is being revealed by The Wall Street Journal for the first time.

More on this when the Slaine filing appears on the SEC website.

Update: The Wall Street Journal has further details on the SEC charges.

In a court document unsealed on Tuesday, prosecutors from the U.S. Attorney’s office in Manhattan alleged Mr. Slaine, from mid-2002 until December 2002, engaged in a scheme with Erik Franklin, a former analyst at Chelsey Capital, to trade on inside information about upcoming UBS analyst upgrades or downgrades. Mr. Franklin allegedly received from tips about the recommendations from Mitchel S. Guttenberg, a former UBS institutional client manager and a one-time member of UBS’s Investment Review Committee.

This entry was posted by Neil Hume on Tuesday, February 2nd, 2010 at 17:17 and is filed under Capital markets, People. Tagged with Galleon, MITCHEL GUTTENBERG, Raj rajaratnam, sec. Edit this entry.