Share
NEW YORK Criminal charges have been filed against 14 people, including attorneys and Wall Street professionals, in a widening $53 million insider trading case that has already snared one of the richest men in America, federal prosecutors said Thursday.
The actions raise to 20 the number of people who have been charged in the case first disclosed last month with the arrests of Galleon Group founder and hedge fund operator Raj Rajaratnam and five others.
At the time, U.S. Attorney Preet Bharara called the first arrests "a wake-up call for Wall Street."
"Today the alarm bells have only grown louder," he said at a news conference Thursday.
Bharara said that the total profits alleged by prosecutors was $40 million. The Securities and Exchange Commission raised the total to $53million, saying it includes millions in profits not described in the criminal complaints.
He said he knew people would ask whether the insider trading case was the tip of the iceberg of illicit trading on Wall Street.
"We don't have an answer to that, but we aim to find out," he said.
He said eight people were arrested Thursday on securities fraud charges, and another five have already pleaded guilty and are cooperating. Another person is still at large, he said.
Through his lawyer, Rajaratnam has denied participating in the scheme to use inside information to trade stocks at a profit ahead of public announcements.
In court papers, new details about the alleged scheme emerged to show how the government built its case.
According to papers filed Thursday in U.S. District Court in Manhattan, Zvi Goffer operated an insider trading network in 2007 and 2008 that included a lawyer who fed tips gleaned from his firm's work on acquisition deals.
Goffer worked at Shottenfeld Group LLC in Manhattan in 2007 and at Galleon Group for the first nine months of 2008 before he started his own trading firm, the papers said. He is 32 and lives in New York City.
The papers put Goffer in a central role. It was not immediately clear who would represent him at an initial court appearance.
A criminal complaint prepared by FBI Agent David Makol said Goffer paid others to obtain secrets about public companies' planned merger and acquisition activity that he then used to execute profitable securities trades.
The complaint said Goffer provided conspirators with prepaid cellular telephones so they could communicate in a way that reduced their chance of detection by law enforcement.
