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Chiesi pleads guilty in Galleon insider trading case

Ex-hedge fund employee cops to securities-fraud conspiracy counts

SAN FRANCISCO (MarketWatch) — Danielle Chiesi admitted conspiring to commit securities fraud Wednesday, the biggest guilty plea so far in the government’s insider-trading investigation of hedge fund Galleon Group.

Chiesi, a former employee of hedge fund firm New Castle Funds LLC, pled guilty to three counts of conspiracy to commit securities fraud before U.S. District Judge Richard Holwell in Manhattan.

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Each count carries a maximum sentence of five years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense, the Justice Department noted in a statement.

Chiesi, as well as Mark Kurland, a top executive at New Castle, and allegedly Galleon founder Raj Rajaratnam, shared and traded on material, nonpublic information given as tips by company insiders such as Robert Moffat, a former group executive at International Business Machines Corp. /quotes/comstock/13*!ibm/quotes/nls/ibm (IBM 155.43, -0.26, -0.17%) , the Justice Department said.

The insider information — about companies including IBM, Advanced Micro Devices /quotes/comstock/13*!amd/quotes/nls/amd (AMD 7.94, +0.01, +0.13%)  and Sun Microsystems /quotes/comstock/15*!orcl/quotes/nls/orcl (ORCL 31.40, -0.20, -0.63%)  — helped New Castle generate profits of at least $1.7 million, according to the government.

Chiesi, 45, is due to be sentenced on May 13, the Justice Department noted. Moffat and Kurland have already pleaded guilty and been sentenced.

Rajaratnam’s fighting the federal insider-trading allegations against him. The Justice Department noted that the charges are “merely accusations” and that he’s presumed innocent until proven guilty.