U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 22051 / July 20, 2011

SEC v. Michael Cardillo, Civil Action No. 11-CV-0549 (S.D.N.Y.) (RJS)

Former Galleon Trader Michael Cardillo Settles SEC Insider Trading Charges

The Securities and Exchange Commission announced today that on July 18, 2011, the Honorable Richard J. Sullivan of the United States District Court for the Southern District of New York entered a judgment against Michael Cardillo in SEC v. Michael Cardillo, 11-CV-0549, an insider trading case the SEC filed on January 26, 2011. The SEC charged Cardillo, who was a trader at the hedge fund investment adviser Galleon Management, LP during the relevant time period, with using inside information to trade ahead of the September 2007 announced acquisition of 3Com Corp. and the November 2007 announced acquisition of Axcan Pharma Inc.

In its complaint, the SEC alleged that Arthur Cutillo and Brien Santarlas, two former attorneys with the international law firm of Ropes & Gray LLP, misappropriated from their law firm material, nonpublic information concerning the acquisitions of 3Com and Axcan, and tipped the inside information, through another attorney, to Zvi Goffer, a former proprietary trader at Schottenfeld Group LLC, in exchange for kickbacks. The SEC further alleged that Goffer tipped information about these acquisitions to Craig Drimal, a trader who worked out of the offices of Galleon, who tipped the information to Cardillo. As alleged in the complaint, Cardillo then traded in the securities of 3Com and Axcan on behalf of a Galleon hedge fund.

To settle the SEC's charges, Cardillo consented to the entry of a judgment that: (i) permanently enjoins him from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; and (ii) orders him to pay disgorgement of $58,520 plus $9,523 in prejudgment interest, and a civil penalty of $29,260. In a related SEC administrative proceeding, Cardillo consented to the entry of an SEC order barring him from association with any investment adviser, broker, dealer, municipal securities dealer, or transfer agent. Cardillo previously pled guilty to charges of securities fraud and conspiracy to commit securities fraud in a related criminal case, United States v. Michael Cardillo, 11-CR-0078 (S.D.N.Y.), and is awaiting sentencing.

For further information, see Litigation Release No. 21826 (Jan. 26, 2011).