Galleon Consultant pleads guilty

Danielle Chiesi, a leading defendant in the sprawling Galleon hedge fund insider trading probe, pleaded guilty Wednesday to fraud.

Chiesi, a former consultant with New Castle Funds, pleaded guilty to three counts of conspiracy to commit securities fraud, the US attorney’s office for New York said. She had been accused of earning the hedge fund at least 1.7 million dollars on the basis of stolen data.

“By sharing and conspiring to trade on inside information, Chiesi compromised the companies she sold out and distorted the market for their stocks,” prosecutor Preet Bharara said.

“Today’s plea should send yet another strong message that we have zero tolerance for privileged professionals who game the system.”

New Castle was the hedge fund at now defunct bank Bear Stearns. Together with Raj Rajaratnam at Galleon Management, Chiesi was accused of being an active member of a ring acting on non-public information concerning companies such as Intel Corp and IBM.

Chiesi, 45, would ordinarily face up to five years in prison on each of the three fraud counts. However, her plea agreement with prosecutors includes a sentencing range of just 37 to 46 months.

Sri Lankan-born Rajaratnam has pleaded not guilty and is expected to go on trial early this year.

AFP