Another pleads guilty in Galleon case as Rajaratnam jury sits

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April 27, 2011 10:44 PM EST

While a jury studied the evidence in Raj Rajaratnam's trial on Tuesday, a former trader associated with his Galleon Group hedge fund became the latest to plead guilty in a sweeping government probe of insider trading on Wall Street.

Former trader Craig Drimal, whom prosecutors said worked in Galleon's offices in New York, but was not employed there at the time of his November 2009 arrest, pleaded guilty to securities fraud and conspiracy charges.

Drimal pleaded guilty in Manhattan federal court, four floors above where 12 jurors were locked in a room weighing Rajaratnam's fate. The jury went into the courtroom early on Tuesday afternoon to listen to replays of nine government phone taps in evidence.

Drimal is the 21st out of 26 people accused to admit to charges in the biggest Wall Street insider trading case in decades.

Sri Lankan-born Rajaratnam, 53, is the only one to go on trial so far. Drimal had been scheduled to go on trial with three others on May 16. One defendant is at large.

In Rajaratnam's trial, the jury is in its second day of reviewing evidence, including FBI phone taps and testimony by three former friends who became government witnesses.

During the seven week-long trial, defense lawyers presented evidence that Rajaratnam's trades were guided by public information, not leaks of corporate secrets by highly placed insiders as the prosecution contends.

Jurors must be unanimous for a guilty verdict on any of the 14 counts of securities fraud and conspiracy. If convicted, Rajaratnam faces a prison sentence of up to 25 years.

DRIMAL REGRETS ACTIONS

Rajaratnam's October 2009 arrest was part of an investigation that prosecutors described as the biggest probe of insider trading at hedge funds on record.

He and other suspects, including Drimal had been subjected to court-approved FBI phone taps -- tactics traditionally used in probes of organized crime families, political corruption and drug trafficking, not white-collar cases.

Rajaratnam, Drimal and other defendants failed in their bids before separate judges to have wiretap evidence excluded on privacy and other grounds.

Drimal, 54, told U.S. District Judge Richard Sullivan that he traded in shares of computer network equipment maker 3Com Corp and Canadian drug company Axcan Pharma Inc, based on tips from lawyers working on merger transactions.

"At the time I did these trades," Drimal said, "I believed my conduct was illegal and wrong, and I deeply regret these actions that have caused such pain for my family and friends."

Drimal is free on bail until sentencing on Sept. 9. The government has suggested a prison term of between five years and 10 months, and seven years and three months.

His lawyer, JaneAnne Murray, declined to comment after the proceeding.

The cases are USA v Raj Rajaratnam et al, U.S. District Court, Southern District of New York, No. 09-01184; and USA v Goffer et al in the same court, No. 10-00056.

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