A Wall Street lawyer has admitted he sold inside information about upcoming major mergers and as a result numerous others made millions in illegal profits.
Brien Santarlas, a former attorney with Ropes & Gray, pleaded guilty in federal court in Manhattan today, admitting he leaked private information in 2007 about Bain Capital Partners upcoming acquisition of 3Com. He also said he tipped off investors to an upcoming acquisition of Axcan by TPG Capital.
Santarlas admitted he was paid thousands of dollars by those who would later earn "millions of dollars in unlawful profits," prosecutors said.
The guilty plea is linked to the FBI's ongoing insider trading investigation into hedge fund traders and white-shoe advisers that made headlines after Raj Rajaratnam, the head of the Galleon Group, was arrested for allegedly helping to orchestrate a $20 million dollar scheme.
The Galleon case has already resulted in more than a dozen arrests on Wall Street -- and investigators have said more are coming.
It is the biggest hedge fund insider trading case in U.S. history, but Rajaratnam, through, his attorney has denied any wrongdoing.
A former Moody's executive, an IBM official, and a former Sullivan and Cromwell lawyer are among those already arrested and charged.
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U.S. attorney Preet Bharara has said investigators in this case used wire-taps and other mafia-busting like methods to uncover the alleged white collar scheme.
Officials say hedge fund managers and their associates had been using pre-paid cells phones to pass on inside information as well as making cash payoffs to try to hide the illegal money schemes.
(Additional reporting by Jonathan Dienst, WNBC)
