David Plate, who is charged in the Galleon Group LLC insider-trading case, pleaded guilty to two criminal counts and is cooperating with the government.
The plea came in a hearing today before U.S. District Judge Richard Sullivan in New York. Plate, who admitted to securities fraud and conspiracy to commit securities fraud, told Sullivan that he bought 50,000 shares of Axcan Pharma Inc. in November 2007, based on insider information that originated with two lawyers at the law firm Ropes & Gray.
The counts Plate pleaded to carry a combined maximum sentence of 25 years in prison. Sullivan didn’t set a date for sentencing.
Plate, a former trader at Schottenfeld Group LLC, is among 21 people charged in two overlapping insider trading cases involving Galleon Group founder Raj Rajaratnam. Plate is one of 12 who have pleaded guilty. Most but not all have agreed to cooperate with prosecutors and testify against others.
The first wave of arrests in the case came on Oct. 6, when Rajaratnam was among six people accused by federal prosecutors. Four of those have pleaded guilty. Rajaratnam has denied wrongdoing.
Plate’s was arrested Nov. 5, when prosecutors announced a second round of charges in an alleged insider trading ring led by former Galleon trader Zvi Goffer. Plate, Goffer and five others were indicted in January. Plate is the only defendant among those seven to plead guilty.
Among the alleged sources of information for the so-called Goffer ring were lawyers at Ropes & Gray. Arthur Cutillo, an attorney at the firm, was indicted along with Plate and Goffer and has pleaded innocent. Another former lawyer at the firm, Brien Santarlas, has pleaded guilty and is cooperating with prosecutors.
Santarlas admitted in his Dec. 10 plea that he passed along tips about transactions on which Ropes & Gray worked.
In the hearing today, Plate also admitted getting tips on 3Com Corp. from Goffer. Plate said that Goffer told him to keep his research file on 3Com to help cover his tracks.
The case is U.S. v. Goffer, 10-cr-56, U.S. District Court, Southern District of New York (Manhattan).