Legal News

?Tipper X? Identified: Galleon Insider Trading Case Could Ramp Up

By Ashby Jones

By the time the ever-growing Gallon Group insider-trading investigation wraps up, we wonder if there will be anyone left in the hedge-fund world who’s not fingered.

We got another name on Tuesday, Thomas Hardin, a trader at hedge fund Lanexa Global Management. Hardin had previously been known simply as “Tipper X.” Folks familiar with the investigation think Hardin could lead prosecutors to scrutinize hedge funds not previously implicated in the probe.

Hardin, 32 years old, was included in a list of individuals that the SEC has provided to defense lawyers as potential witnesses as part of the discovery process in the civil proceeding in the Galleon insider-trading case.

A lawyer for Hardin, who hasn’t been charged in the case and left Lanexa in January 2009, didn’t return calls for comment. Click here for the WSJ story, here for the NYT story.

At issue is the largest insider-trading case filed by the government in two decades, involving more than 20 defendants and several confidential witnesses. The defendants have pleaded not guilty.

In November, the U.S. widened the case, eventually charging 15 others, some of whom were alleged to have exchanged cash on street corners.

Hardin, according to the SEC complaint, was tipped off on July 2, 2007, to a Blackstone Group takeover of Hilton Hotels, according to the SEC complaint.

After receiving the tip, the SEC says, Tipper X then tipped Gautham Shankar, a trader involved in a separate ring, about the takeover. Tipper X “traded profitably” on the tip, according to the SEC complaint, while Shankar bought 25,000 shares of Hilton and made a profit of $156,000, the complaint says. Shankar pleaded guilty to insider-trading charges and is cooperating with the government’s investigation as well. A lawyer for Shankar didn’t return the WSJ’s calls for comment.

Full post as published by Law Blog - WSJ.com on January 13, 2010 (boomark / email).