Lawyer Pleads Guilty to Selling Insider Tips

Lawyer Pleads Guilty to Selling Insider Tips

The insider trading ring centered on the Galleon Group and its billionaire founder, Raj Rajaratnam, has ensnared another conspirator, who pleaded guilty on Thursday in the expanding investigation.

Brien P. Santarlas, a former lawyer at Ropes & Gray, admitted in Federal District Court in Manhattan to charges of fraud and conspiracy for passing inside information on pending takeovers in exchange for $32,500 in cash.

Mr. Santarlas is the sixth person in the case to plead guilty. People briefed on the investigation said he was cooperating with prosecutors.

So far, the Securities and Exchange Commission and federal prosecutors in New York have identified 30 people and entities connected to the inquiry. More names are expected to surface next week, the people briefed on the case said.

Mr. Santarlas, a 33-year-old associate at the firm, admitted to stealing confidential information about pending mergers that Ropes & Gray was working on from June 2007 to May 2008. According to his plea agreement, he then passed the information to other co-conspirators, including Jason C. Goldfarb, a lawyer in private practice in Brooklyn.

Mr. Santarlas, who left Ropes & Gray in September 2008, was charged with passing on information about the pending takeovers of Axcan Pharma and 3Com. The law firm represented two private equity firms in connection with the takeovers.

Mr. Santarlas is the second lawyer from Ropes & Gray, a large firm that specializes in corporate law and litigation matters, to be implicated in the Galleon case.

Also charged in the case is Arthur J. Cutillo, 33, who was arrested on Nov. 5 and accused of leaking secret tips on 3Com and Axcan.

The S.E.C. charged that the tips eventually led to a total of $20 million in illicit gains, including a combined $10.5 million by two unnamed hedge fund advisers.

“The actions of these two former associates represent an extreme breach of their duty of trust to our clients and the firm, as well as gross violations of our policies and civil and criminal law,” said a spokesman for Ropes & Gray. He said the law firm was cooperating with the investigation.

The S.E.C., which brought a parallel civil suit on Thursday, said Mr. Cutillo and Mr. Santarlas also passed information about the pending takeovers to Zvi Goffer, a trader at the Schottenfeld Group. Mr. Goffer, who was known as “the Octopussy” because he had lines into so many sources of inside information, passed the tips along to several other traders who have since been charged in the scheme, the S.E.C. said.

One of the traders is Craig Drimal, who worked in a secluded office at Galleon and was known as Ruby by other Galleon employees. Mr. Drimal, 53. who made a combined $6.5 million on the trades, was not an employee of Galleon, but a close friend of a co-founder, Gary Rosenbach, according to former employees.

The New York Times