Raj Rajaratnam, founder of the Galleon Group, has been arrested and charged along with five others. Prosecutors indicated that at issue is a $20 million insider-trading case.
The Galleon Group is a $7 billion company, and Ram Rajaratnam is both its founder as well as the portfolio manager for Galleon Technology Funds. He faces four counts of conspiracy and eight counts of securities fraud.
Besides Ram Rajaratnam, others charged include Danielle Chiesi and Mark Kurland of New Castle Partners LLC, the one-time equity hedge fund group at Bear Stearns; Rajiv Goel, director in strategic investments at Intel Corp.'s investment division; Anil Kumar, a director at global management-consulting firm McKinsey & Co.; and Robert Moffat, a senior VP at IBM.
The Ram Rajaratnam / Galleon Group case appears to be yet another example of Wall Street executives and others in high power, taking advantage of underregulation of the system or, it appears, just plain fraud, to improve their own bottom line.
The case has been under investigation since at least March 8th of 2008. Federal prosecutors on that date received approval to tap Ram Rajaratnam's cell phone. Prosecutors said they’ve also been tapping two of Chiesi’s landlines since August 2008. There was one other person whose cell phone line was tapped, but that person was not named, as he is cooperating in the investigation.
Ram Rajaratnam and the other five are charged with insider trading in 2008 and 2009. The companies involved include Google, Polycom, Hilton Hotels and Advanced Micro Devices.
Ram Rajaratnam is a graduate of the University of Pennsylvania’s Wharton School Earlier this year, he was identified year by Forbes as the 559th richest person in the world, with a net worth of $1.3 billion. Galleon Group is based in Manhattan.
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