November 8, 2010 / 5:29 PM / 10 years ago

Ex-Atheros VP sentenced to 18 months in Galleon case

NEW YORK (Reuters) - A former vice president of wireless networking chipmaker Atheros Communications Inc was sentenced on Monday to serve 18 months in prison after pleading guilty in the broad Galleon hedge fund insider trade case.

The executive, Ali Hariri, admitted in March to securities fraud and conspiracy charges stemming from information and tips about Atheros in 2008 and 2009 that he gave Ali Far, founder of Spherix Capital LLC hedge fund and a former Galleon employee.

Hariri, 39, who declined to speak at his sentencing in U.S. District Court in New York, was the third to be sentenced out of 12 defendants who have pleaded guilty in the case.

In all, 21 traders, lawyers and executives were accused last October and November in a probe in which the government also charged prominent Galleon hedge fund founder Raj Rajaratnam. He has pleaded not guilty and is scheduled to go on trial on January 17.

Hariri’s lawyer, Cristina Arguedas, told the court on Monday that the former executive was “just one of the people that Ali Far used” to gather information for his hedge fund. She said Hariri gave Far information “for friendship and for stock tips that added up to very little money.”

U.S. prosecutors described its probe into at least two purported networks of people sharing confidential information on publicly traded companies as the biggest hedge fund insider trading case in the United States.

“The critical consequence is the harm to proper operation of an efficient market,” U.S. District Judge Richard Holwell said during Hariri’s sentencing proceeding. “It is not so much the dollars but what is the nature of the conduct at stake and what is the risk to the market place.”

In addition to 18 months prison time, Holwell ordered Hariri to serve two years of supervised release and fined him $50,000.

Much of the government’s evidence was gathered using wiretaps and cooperators. Rajaratnam is challenging the legality of the government secretly recording his private conversations.

Far, who has also pleaded guilty, is among eight defendants cooperating with the government investigation. He has not yet been sentenced.

The others sentenced so far — former New Castle Funds LLC executive Mark Kurland and former International Business Machines Corp executive Robert Moffat — received 27 months and six months of imprisonment respectively.

The cases are USA v Hariri, U.S. District Court for the Southern District of New York, No. 10-173; USA v Raj Rajaratnam et al No. 09-01184; and USA v Goffer et al 10-56.

Reporting by Grant McCool, editing by Gerald E. McCormick

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