Attorney charges 14 defendants with USD20m in insider trading

Attorney charges 14 defendants with USD20m in insider trading

Preet Bharara, the US Attorney for the Southern District of New York, has made charges against 14 Wall Street professionals and attorneys arising out of their ongoing investigation of insider trading at hedge funds and stock trading firms.

The charged defendants include hedge fund managers and trading firm executives, lawyers and corporate insiders.

Five of the charged defendants previously pleaded guilty to insider trading charges in Manhattan federal court.

The defendants collectively are charged with allegedly participating in insider trading schemes that generated more than USD20m in illegal profits.

The following eight defendants were arrested:

1. Zvi Goffer, who formerly worked at The Schottenfeld Group, a broker dealer in New York, and currently operates a trading firm called Incremental Capital in New York;
2. Arthur Cutillo, an attorney at the law firm of Ropes & Gray in New York;
3. Jason Goldfarb, an attorney in New York;
4. Craig Drimal, who worked in the offices of the Galleon Group in New York, but is not employed by Galleon;
5. Emanuel Goffer, who formerly worked at Spectrum Trading, a trading firm in New York, and currently is associated with Incremental;
6. Michael Kimelman, currently associated with Incremental;
7. David Plate, formerly employed by Schottenfeld, and currently associated with Incremental; and
8. Ali Hariri, a vice president of Atheros Communications.

A ninth charged defendant, Deep Shah, who was formerly employed by Moody's Investors Service in New York, remains at large.

The five defendants who were previously charged and have pleaded guilty in Manhattan federal court to insider trading crimes are:

1. Steven Fortuna, formerly a managing director of S2 Capital, a hedge fund based in Boston;
2. Ali Far, founder of Spherix Capital, a hedge fund based in California;
3. Richard Choo-Beng Lee, former president of Spherix;
4. Roomy Khan, a California trader who served at certain times as a paid consultant to a hedge fund based in New York; and
5. Gautham Shankar, a proprietary trader at Schottenfeld in New York.

According to the complaints and criminal information unsealed in the Manhattan federal court, Zvi Goffer operated an insider trading network through which he obtained, passed to others and traded on material, non-public information regarding mergers and acquisitions of public companies. In exchange for the inside information, Zvi Goffer and others paid sources for the inside information. In an unsuccessful effort to conceal their fraudulent schemes, Zvi Goffer and his co-conspirators used prepaid telephones to share the inside information.

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