Tuesday, October 20, 2009

Billionaire Hedge Fund Manager Arrested For Fraud & Insider Trading

Raj Rajaratnam, 52, the billionaire hedge fund founder and head of New York-based Galleon Group, was arrested Friday and charged with fraud and insider trading in a wide ranging case of conspiracy that netting a reported $20 million in ill-gotten gains. Specifically, Rajaratnam has been charged with four counts of conspiracy and eight counts of securities fraud. The hedge funds named in the case are New Castle, Galleon Technology, and Intel Capital. Others charged criminally in the case include Rajiv Goel, director in strategic investments at Intel Corp.'s investment arm; Anil Kumar, a director at global management-consulting firm McKinsey & Co.; Danielle Chiesi and Mark Kurland of New Castle Partners LLC, the one-time equity hedge-fund group at Bear Stearns Asset Management Inc.; and Robert Moffat, a senior vice president at International Business Machines Corp. The conspirators allegedly traded on insider information in the stocks of at least IBM, Advanced Micro Devices, Sun Microsystems, Google, Polycom and Hilton Hotels.

Read the story here, here and here.

Update (5/12/11): Rajaratnam was convicted by a jury on 14 felony fraud and insider trading counts.

Update (10/14/11): Rajaratnam was sentenced to 11 years in prison for his role in "the largest hedge fund insider trading scheme in history," according to the Department of Justice.

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