[JURIST] A key defendant in the Galleon Group insider trading case pleaded guilty [press release] Wednesday to three counts of conspiracy to commit securities fraud before judge Richard Holwell of the US District Court for the Southern District of New York [official website]. Danielle Chiesi was accused of communicating non-public information about IBM Corporation, Advanced Microdevices (AMD) and Sun Microsystems (now Sun-Oracle) [corporate websites] in 2008 and 2009 to her superiors at New Castle Funds LLC [fund profile], a Manhattan-based investment advisory company formerly part of Bear Stearns [NYT backgrounder]. Chiesi was arrested in 2009 along with Galleon founder Raj Rajaratnam [JURIST news archive] and accused of using the information to reap more than $4 million in illegal profits for New Castle. Her attorney claims she never traded on her own account using the information, and that the actual take was considerably lower. New Castle is said to have gained at least $1.7 million from the trades. Chiesi reportedly got the information from former IBM executive Robert Moffat, with whom she was having an affair. Moffat is currently serving six months in prison for insider trading in connection with the Galleon case. While each count carries a maximum sentence of five years in prison and fines as much as double the gross gain from the offense, Chiesi is said to have signed a plea bargain that will limit her confinement to 46 months at most. US Attorney Preet Bharara lauded the development:

Today, Danielle Chiesi admitted to exploiting her access to valuable, non-public information to reap $1.7 million in illegal gains. By sharing and conspiring to trade on inside information, Chiesi compromised the companies she sold out and distorted the market for their stocks. Today’s plea should send yet another strong message that we have zero tolerance for privileged professionals who game the system and who think the rules apply only to everyone else.

Rajaratnam’s trial in what has been called the biggest insider trading investigation in history is set start on February 28, also before Judge Holwell.

Moffat was sentenced [JURIST report] in September 2010 and ordered to pay a $50,000 fine for his role in the scheme after he pleaded guilty [JURIST report] the previous March. Former Intel Capital [corporate website] executive Rajiv Goel pleaded guilty [JURIST report] to insider trading charges in connection with the Galleon probe earlier in February. Rajaratnam, Chiesi, Goel and Moffat were arrested in October and charged [complaint, PDF] along with two other individuals and two business entities with insider trading. The complaint alleged that the individuals provided Galleon Group and another hedge fund with material nonpublic information about several corporations upon which the funds traded, generating $25 million in illicit gain. Rajaratnam and Chiesi pleaded not guilty [JURIST report] in December after being indicted for insider trading.