Galleon Management, LP, et al.

U.S. Securities and Exchange Commission

Litigation Release No. 21732 / November 8, 2010

SEC v. Galleon Management, LP, et al., Civil Action No. 09-CV-8811 (SDNY) (JSR)

SEC Obtains Consent Orders and Judgments as to Defendants Roomy Khan and Rajiv Goel

The SEC announced that, on October 27, 2010 and November 5, 2010, respectively, the Honorable Jed S. Rakoff, United States District Judge, United States District Court for the Southern District of New York, entered Consent Orders and Judgments as to Defendants Roomy Khan ("Khan") and Rajiv Goel ("Goel") in the SEC's insider trading case, SEC v. Galleon Management, LP, et al., 09-CV-8811 (S.D.N.Y.) (JSR). The SEC filed its action on October 16, 2009, against Raj Rajaratnam ("Rajaratnam"), Galleon Management, LP ("Galleon"), Goel, and others. On November 5, 2009, the Commission amended its complaint to add allegations against additional entities and individuals, including Khan. Rajaratnam is the founder and a Managing General Partner of Galleon, a New York hedge fund, which at the time of the alleged insider trading had billions of dollars under management. When the SEC's complaint was filed, Goel, a friend of Rajaratnam's, was a managing director within the treasury group of Intel Corp. ("Intel"), as well as the Director of Strategic Investments at Intel Capital, an Intel subsidiary that makes proprietary equity investments in technology companies. Khan was an individual investor who had been employed at Intel in the late 1990s and had been subsequently employed at Galleon.

The SEC alleged that Rajaratnam unlawfully traded based on inside information involving numerous companies. It further alleged that Goel acquired material non-public information while working at Intel and passed that information to Rajaratnam, who traded on it. The SEC also alleged that Khan acquired material non-public information from several sources, including a senior executive at Polycom, Inc., a Moody's rating agency analyst, and an employee at an investor relations consulting firm, and traded on that information. Khan also passed such information on to others, including Rajaratnam, who traded on it. The SEC charged Rajaratnam, Goel, and Khan with violations of Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933 ("Securities Act").

The Consent Order and Judgment entered against Khan permanently enjoins her from violating the antifraud provisions of the federal securities laws, Section 10(b) of the Exchange Act, Exchange Act Rule 10b-5, and Section 17(a) of the Securities Act. It also orders her to pay disgorgement in the amount of $1,552,566.94, plus prejudgment interest in the amount of $304,398.77, for a total of $1,856,965.71. The order provides that the Court will determine at a later date whether any civil penalty is appropriate. Khan has agreed to cooperate with the SEC in connection with this action and related investigations.

The Consent Order and Judgment entered against Goel permanently enjoins him from violating the antifraud provisions of the federal securities laws, Section 10(b) of the Exchange Act, Exchange Act Rule 10b-5, and Section 17(a) of the Securities Act. It also orders him to pay disgorgement in the amount of $230,570.52, plus prejudgment interest in the amount of $23,447.21, for a total of $254,017.73. The order provides that the Court will determine at a later date whether any civil penalty is appropriate. The order also bars Goel from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act or that is required to file reports pursuant to Section 15(d) of the Exchange Act. Goel has agreed to cooperate with the SEC in connection with this action and related investigations.

In addition, since the case was filed the SEC has:

• entered into a settlement with Defendant Anil Kumar ("Kumar"), a former director at the global consulting firm McKinsey & Co., pursuant to which Kumar is permanently enjoined from violating the antifraud provisions of the federal securities laws, Section 10(b) of the Exchange Act, Exchange Act Rule 10b-5, and Section 17(a) of the Securities Act, and is required to pay disgorgement in the amount of $2.6 million, plus prejudgment interest in the amount of $190,621, for a total of $2,790,621. The Court will determine at a later date whether any civil penalty is appropriate as to Kumar. Kumar has agreed to cooperate with the SEC in connection with this action and related investigations.

• entered into a settlement with Defendant Schottenfeld Group, LLC ("Schottenfeld"), a New York limited liability company and registered broker-dealer, pursuant to which Schottenfeld is permanently enjoined from violating the antifraud provisions of the federal securities laws, Section 10(b) of the Exchange Act, Exchange Act Rule 10b-5, and Section 17(a) of the Securities Act, and is required to pay disgorgement in the amount of $460,475.28, plus prejudgment interest in the amount of $72,202.72, and a civil penalty of $230,237.64, representing fifty percent of the disgorgement amount, a discount from a one-time penalty in recognition of its agreement to cooperate. Schottenfeld also agreed to implement enhanced policies and procedures to prevent future securities laws violations, as well as to retain an independent consultant to review its policies and procedures within one year, and to report its findings to the SEC staff.

• entered into settlements with Defendants Choo-Beng Lee ("Lee") and Ali T. Far ("Far"), who were both managing members of Far & Lee LLC ("Far & Lee"), a Delaware limited liability company. In addition, Lee was president and Far a managing member of Spherix Capital LLC ("Spherix"), an unregistered hedge fund investment adviser based in San Jose, California. Pursuant to the settlements, Lee and Far are permanently enjoined from violating the antifraud provisions of the federal securities laws, Section 10(b) of the Exchange Act, Exchange Act Rule 10b-5, and Section 17(a) of the Securities Act, and are required, jointly and severally, to pay disgorgement in the amount of $1,335,618.17, plus prejudgment interest in the amount of $96,385.52, and a civil penalty of $667,809.09, representing fifty percent of the disgorgement amount, a discount from a one-time penalty in recognition of their cooperation.

• dismissed its claims against Far & Lee and Spherix, which are now defunct or nearly so, in exchange for their agreement to cooperate and cease doing business.

For further information, see Litigation Release Nos. 21255 (October 16, 2009), 21284 (November 5, 2009), 21397 (January 29, 2010), 21493 (April 20, 2010), and 21526 (May 17, 2010).