December 10, 2009 4:02 PM

Ex-Ropes Lawyer Pleads Guilty in Connection with Galleon Case

Posted by Zach Lowe

Update: 3:45 p.m. This post has been updated to reflect a report from the New York Law Journal, an Am Law Daily sibling publication.

A second former Ropes & Gray attorney has been identified as a key cog in the growing Galleon Group insider trading probe. Former Ropes IP associate Brien Santarlas, 33, pleaded guilty this afternoon to stealing information about firm clients and passing that information on to other sources for insider trading purposes. As you surely know, former Ropes associate Arthur Cutillo was charged last month for providing traders with inside tips about three private equity transactions on which Ropes was advising. He has pleaded not guilty to the charges.

According to the New York Law Journal, Santarlas admitted that he and Cutillo obtained inside information about upcoming private equity deals by "reviewing files, overhearing conversations and questioning unwitting associates." Santarlas was paid $32,500 for obtaining that information, and will have to forfeit that amount as part of his plea deal with federal prosecutors, the NYLJ reports. Traders, including one code-named "Octopussy," allegedly made up to $20 million in profits off inside information Santarlas, Cutillo, and others provided about pending deals.

In response to requests for comment, Ropes & Gray released the following statement on Thursday: "The actions of these two former associates represent an extreme breach of their duty of trust to our clients and the firm, as well as gross violations of our policies and civil and criminal law. We have been actively cooperating with the authorities in their investigation of this matter." 

A source familiar with the matter confirms that Santarlas left Ropes in September 2008.

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