December 5, 2023

DealBook: Trader Who Worked With Galleon Pleads Guilty

Craig DrimalFrank Franklin II/Associated Press Craig Drimal leaving the Federal District Court in Manhattan in November 2009.

As jurors continued to deliberate the fate of Raj Rajaratnam on Tuesday, four floors above them, a trader associated with Mr. Rajaratnam’s Galleon Group hedge fund pleaded guilty to insider trading.

Craig Drimal, a trader who worked closely with Galleon, is the 21st of the 26 people charged in the broader insider trading ring connected to Mr. Rajaratnam who have pleaded guilty. Mr. Drimal was scheduled to go on trial next month.

In the courtroom of Judge Richard Sullivan, Mr. Drimal, 54, admitted to earning $6.4 million in illegal profit trading on inside information provided by lawyers at Ropes Gray who were working on merger deals with 3Com and Axcan Pharma. Mr. Drimal admitted to passing those tips on to a trader at Galleon.

“At the time I did these trades, I believed my conduct was illegal and wrong, and I deeply regret these actions which caused so much pain to my family and friends,” he said.

Judge Sullivan set his sentencing for Sept. 9. His recommended sentence is 70 to 87 months.

The Galleon networkAzam Ahmed and Guilbert Gates/The New York Times Click on the above graphic to get a visual overview of the Galleon information network.

Downstairs at the Mr. Rajaratnam trial, jurors asked the judge to replay nine secretly recorded phone conversations between Mr. Rajaratnam and his alleged accomplices. Mr. Rajaratnam is charged with 14 counts of insider trading-related crimes and could face up to 25 years in prison if convicted.

There was little commonality among the nine wiretaps, which included Mr. Rajaratnam chatting with cooperating witnesses. Anil Kumar and Rajiv Goel, as well with his brother Rengan Rajaratnam. Jurors reheard discussions about confidential information regarding publicly traded stocks including Advanced Micro Devices and and Spansion.

They also listened to a wiretap on which Mr. Rajaratnam coaches his colleagues on how to create an “e-mail trail” to make it appear that their trading was legitimate.

Among the more eventful moments of the morning came when a pair of security guards rushed toward the jury room and sent out an emergency call for the courthouse nurse. Apparently, an easel displaying exhibits fell on one of the jurors arms. When the jury entered the courtroom to listen to the audiotapes, a female juror’s left arm was wrapped in a bandage.

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