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The U.S. Securities and Exchange Commission sued Trivium Capital Management LLC and four individuals including Sunil K. Bhalla, a former executive of Polycom Inc. in a case stemming from the Galleon Group LLC insider-trading investigation.

Regulators allege that Bhalla, 54 engaged in insider trading in Polycom, the SEC said. Trivium co-founder Robert Feinblatt, 41; and Jeffrey Yokuty, 37, an analyst who worked at the New York-based hedge fund adviser, engaged in illegal trading in Polycom, Hilton Hotels Corp., Google Inc. and Kronos Inc., the government said.

Feinblatt and Yokuty made more than $15 million in illicit profits, and Galleon founder Raj Rajaratnam received some of the tips, the agency said.

The fourth person named in the complaint, filed today in federal court in New York, was Shammara Hussain, 25, of Fremont, California. Hussain worked at Market Street Partners, a San Francisco-based investor relations consulting firm.

“Today’s action reveals disturbingly corrupt arrangements -- faithless company executives who secretly pass corporate information to hedge fund managers willing to violate the law for profit,” said Robert Khuzami, director of the SEC’s Division of Enforcement.

Roomy Khan

The SEC said Feinblatt and Yokuty received material nonpublic information from Roomy Khan, a former Intel Corp. executive who pleaded guilty in the Galleon Group criminal case and is cooperating in the government’s continuing investigation

Khan, also an individual investor, received information from various sources and served as consultant to Trivium from 2005 to the latter part of 2008, the agency said.

In about 2003, the SEC said, Khan befriended Bhalla, who served as senior vice president at Polycom, a producer of networking applications for voice, video and data networking based in Pleasanton, California.

Bhalla in 2005 obtained advance information about sales and revenues for Polycom’s fourth quarter and passed that information to Khan, the SEC said. Khan earned about $330,000 in illicit profits, the commission said.

Khan later also gave information provided by Bhalla to Feinblatt and Yokuty about Polycom’s 2006 first-quarter earnings and to Rajaratnam, the SEC alleged.

Ex-Moody’s Analysis

Khan also passed on tips from Deep Shah, a former Moody’s Corp. analyst who was a friend and roommate of her cousin, the SEC alleged. At the time Moody’s was evaluating Hilton’s debt. Shah who was named as a defendant in the criminal case, is a fugitive, the U.S. said.

Within weeks of the Hilton trading, the SEC said, Hussain, whose Market Street partners were providing investor relations for Google, tipped Khan about Google’s second-quarter 2007 results, the SEC said. Khan later tipped Feinblatt and Yokuty who also traded on the information, according to the complaint.

Hussain also passed tips to Richard Choo-Beng Lee, the co- founder of Spherix Capital LLC, the SEC alleged.

The government said Hussain is a family friend of Lee, a hedge fund manager, and that she passed the Google tip to him. He used it to trade for his own account and for Far & Lee LLC, the firm he controlled with his business partner, Ali Far, the SEC said. Lee pleaded guilty and is cooperating in the Galleon investigation. Far, who also worked as an analyst and portfolio manager at Galleon, pleaded guilty in November 2009.

27 Sued

The SEC seeks a disgorgement of illicit profits, unspecified penalties and an order that the not violate federal securities law in the future. It seeks to bar Bhalla permanently from acting as an officer or director of a registered public company.

The SEC has brought enforcement actions against 27 insider- trading defendants at hedge funds, including Galleon Group, the agency said.

Lawyers for the defendants couldn’t be immediately reached for comment.

Source: http://www.businessweek.com/news/2011-01-10/sec-sues-trivium-polycom-s-bhalla-in-galleon-case.html