Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Saturday, February 5, 2011

SEC Obtains Consent Order as to Defendant in Galleon Insider Trading Case

The SEC announced that a Consent Order and Final Judgment as to Ali Hariri was entered in federal district court on February 4, 2011, in the SEC's insider trading case, SEC v. Galleon Management, LP, et al., 09-CV-8811 (SDNY) (JSR). The SEC filed its action on October 16, 2009, against Raj Rajaratnam, Galleon Management, LP, and others, alleging a widespread and repeated insider trading scheme involving hedge funds, industry professionals, and corporate insiders. When the SEC's action was filed, Hariri was Vice President of Broadband Carrier Networking at Atheros Communications, Inc.

The SEC alleged that Hariri tipped co-defendant Ali Far in advance of certain of Atheros's earnings announcements, and that Far and co-defendant CB Lee traded profitably based on that information. In exchange, Far tipped Hariri with inside information on another company. Through trading based on inside information he received from Far, Hariri personally profited by $2,548.91.

In a parallel criminal action against him in which Hariri pleaded guilty, United States v. Hariri, 10 CR 00173 (SDNY), Hariri was sentenced to a term of imprisonment of eighteen months, two years supervised release, and ordered to pay a criminal fine of $50,000.

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