Securities and Exchange Commission v. Galleon Management, LP et al

Filing 267

ORDER: that for the reasons stated in the attached letter, the Court hereby terminates this action with respect to defendant Shankar. The Consent Order and Judgment shall otherwise remain in full force and effect. (Signed by Judge Jed S. Rakoff on 4/19/2012) (pl)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

SECURlTIES AND EXCHANGE COMMISSION,
Plaintiff,
-against-

09 Civ. 8811 (JSR)

EeF CASE

GALLEON MANAGEMENT, LP, et aI.,
Defendants.

[PR~] ORDER ~
On June 8, 2011, the Court entered a Consent Order and Judgment as to Defendant

Gautham Shankar, ordering permanent injunctive relief, disgorgement, and prejudgment interest.

The Consent Order and Judgment, however, provided that the Court would determine at a later
date whether it would impose civil penalties against defendant Shankar and, if so) to what extent.
On Apri119, 2012, the Court received the attached letter from the Securities and Exchange
Commission, which requested that this Court terminate this action against defendant Shankar
without imposing civil penalties. The Court agrees. Accordingly, for the reasons stated in the
attached letter, the Court hereby terminates this action with respect to defendant Shankar. The
Consent Order and Judgment shall otherwise remain in full force and effect.
SO ORDERED.

Dated:

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New York, New York
April-fl-.2012

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tJNITED STATES

SECURITIES AND EXCHANGE COMMISSION

NEW YORK REGIONAL OFFICE

3 WORLD FfNANClAL CENTER
ROOM 400
NEW YORK. NEW YORK 10281-1022

April 19, 2012
Via Facsimile

The Honorable Jed S. Rakoff
United States District Judge
U.S. District Court for the Southern District of New York
500 Pearl Street
New York, NY 10007-1312
Re:

SEC v. Galleon Mgmt., LP, et al.; 09 Civ. 8811 (JSR) (S.D.N. Y.)

Dear Judge Rakoff:
In accordance with Your Honor's Individual Rule of Practice 1) and with prior
permission of the Court, counsel for the Commission submits this letter and a proposed order
concerning defendant Gautham Shankar. An electronic copy of the proposed order also was
submitted by email to the Judgment Clerk of the Court, in accordance with ECF Rule 18.4.
On June 8, 2011, the Court entered a Consent Order and Judgment as to Defendant
Gautharn Shankar in this action, ordering permanent injunctive relief, disgorgement in the
amount $243,105.59 and prejudgment interest thereon in the amount $34,462.35, for a total of
$277,567.94. The order provided that the Court would determine at a later date whether, and to
what extent, civil penalties were appropriate. At the time the parties submitted the settlement for
the Court'~ approval, they agreed that a deferral of the decision whether to impose a civil penalty
was warranted, so, that Mr. Shankar's cooperation with the Commission and with the
Government could be taken into consideration ;n the determination whether and to what extent
civil penalties were appropriate. On January 4, 2012, upon stipulation by the parties and by
order of the Court, the date by which such a detennination would be made was adjourned to
April 27, 2012.
Mr. Shankar was separately charged and pleaded gUilty in a parallel criminal case, United
Statesv. Shankar, 09 CV 996 (RIS). On April 18, 2012, Mr. Shankar was sentenced to serve
three years probation, six months of which would be served as home confinement. He also was
ordered to pay a $25,000 fine and to forfeit $448,437. Also, on June 8, 2011, in a'separate case
against Mr. Shankar by the Commission, SEC v. Cutillo et al., 09 CV 9208 (RJS), Mr. Shankar
was ordered, among other things, liable for disgorgement and prejudgment interest for a total of
$124,813.

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·

.

The Honorable Jed S. Rakoff
4119/2012

Page 2
Mr. Shankar agreed to cooperate shortly after he was approached by federal agents in
May 2008. He recorded phone calls with a number of defendants connected to the investigation
underlying this and other actions, and led directly to the cooperation of another witness. We
understand that Mr. Shankar met \vith AUSAs from the SDNY when requested to do so in order
to assist in the Government's investigation and prosecution in the United States v. Goffer, 10 CR
56 (RJS) and other matters. According to the Government. Shankar's cooperation "provided
substantial assistance to the Government in the investigation and prosecution of numerous
individuals.... [T]he derivative fruits of Hardin's cooperation were substantiaL" United States
v. Golfer, 10 CR 56 (RJS). Dk."t. #25 (Govt.'s Sentencing Memo.). "In addition, Shankar
provided the Government with an insider's view of Zvi Gaffer's actions at Schottenfeld while
the Government's investigation was still covert. This provided great assistance to the
Goverrunent in assessing wiretap evidence~ making charging decisions, and devising strategies
for approaching other conspirators to seek their cooperation." Jd
Based on the foregoing and under these circumstances, the Commission believes that
further punitive sanctions in the form of a civil penalty are not necessary to further the
Commission's goals. The Commission respectfully requests that Your Honor terminate this
matter with respect to Mr. Shankar without imposing civil penalties. A proposed order is
attached for the Court's consideration. Counsel for Mr. Shankar, Frederick L. Sosinsky, Esq.,
has informed the undersigned that he agrees with the contents of this letter andjoins in the
Commission's request. The parties remain available for a conference should the Court have any
further questions.
Respectfully submitted,

Valerie A.,Szcze
Counsel for the COnunlssion
cc:

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Frederick L. Sosinsky, Esq. (by email)