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Six charged in 'biggest ever' hedge fund insider trading case

Text by News Wires

Latest update : 2009-10-17

The US Securities and Exchange Commission has arrested Raj Rajaratnam, founder of the Galleon hedge fund, for his alleged part in a $20 million insider trading scheme. Former and present executives from IBM, McKinsey and Intel have also been charged.

REUTERS - Billionaire hedge fund founder Raj Rajaratnam and executives from some of the most prestigious U.S. companies were charged on Friday with the largest hedge fund insider-trading scheme ever.


Investigators said they used court-approved telephone wire taps for the first time in a Wall Street insider trading case, sending shivers through the hedge fund industry which has traditionally picked up and shared trading tips to make big profits.


At the center of the case are Rajaratnam, his Galleon hedge fund and two executives from hedge fund New Castle, which was a unit of Bear Stearns Asset Management before Bears Stearns Cos collapsed in 2008, but is still in operation.


Three executives from major American companies IBM, top consulting firm McKinsey & Co and the venture capital arm of chip giant Intel Corp are also facing criminal charges.


“This is not a garden-variety insider trading case,” Preet Bharara, the U.S. Attorney for Manhattan, said at a news conference. He said the scheme made more than $20 million in illegal profits over several years.

One of the criminal complaints accuses Rajaratnam, 52, considered the richest SriLankan in the world, of conspiring with Intel Capital treasury department managing director Rajiv Goel and Anil Kumar, a director of McKinsey & Co. The alleged offenses took place over three years starting in January 2006.


Galleon had as much as $7 billion under management, the complaint said.
 

Date created : 2009-10-17

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