Atheros VP charged in Galleon insider trading case

SAN FRANCISCO/LOS ANGELES (Reuters) - Atheros Communications Inc's Ali Hariri is the latest Silicon Valley executive to be charged in the largest hedge fund insider trading case in U.S. history.

Hariri, a vice president in Atheros' networking business unit, was charged on Thursday for leaking confidential information to a hedge fund manager in the widening Galleon Group scandal.

A subdued-looking Hariri, who made his initial court appearance in San Francisco federal court in jeans and a dark blue turtleneck sweater, was added along with more than a dozen other defendants to two federal cases filed on October 16 against Galleon founder Raj Rajaratnam and five others.

Atheros said in a statement it has launched a probe into the insider trading allegations and has placed Hariri on leave pending the outcome of the investigation.

U.S. prosecutors and the U.S. Securities and Exchange Commission have since October 16 implicated hedge fund firms, traders, lawyers, a credit analyst and others for trying to profit illegally from trading in companies such as Google Inc, Hilton Hotels Corp and Intel Corp.

Hariri was arrested by the FBI, but freed on Thursday afternoon on a $500,000 bond after he surrendered his passports, including an expired Iranian passport, a prosecutor said at the hearing.

The 38-year-old executive, who told the court he had no attorney, was set to return to court on Monday with counsel to discuss removal proceedings to New York, where the cases are based.

Hariri would not respond to reporters' questions after the brief hearings on Thursday.

He was charged with conspiracy and securities fraud in the criminal case and accused by the SEC of tipping California hedge fund manager Ali Far about Atheros earnings data.

Far then bought shares of the wireless networking company in 2008 and early 2009, according to an SEC complaint.

In exchange, Far advised Hariri to buy or sell stocks of other companies based on insider information that Far himself had obtained, the SEC complaint said.

Hariri served as vice president of Atheros' broadband carrier networking business unit during the alleged insider trades, court documents showed.

Far, founder of the Spherix hedge fund, has pleaded guilty to fraud and conspiracy charges and has agreed to cooperate with the government, prosecutors said.

Atheros shares were down just 0.2 percent in after-hours trading from their regular-session close of $26.75.

(Writing by Gina Keating in Los Angeles; editing by Edwin Chan Andre Grenon)