Raj Rajaratnam of Galleon Group arrested in insider trading case
Billionaire Raj Rajaratnam, a partner at hedge fund Galleon Group, is among six nabbed in latest Wall Street scandal.
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• Anil Kumar, a director at McKinsey & Co., the management consulting firm.
All are charged with participating in insider trading schemes. The FBI said Ms. Chiesi, Mr. Kurland, and Rajaratnam "repeatedly traded on material, nonpublic information" given as tips by insiders at hedge funds and public companies.
"They may have been privy to a lot of confidential corporate information," Mr. Bharara said. "But there was one secret they did not know: We were listening."
The FBI said this was the first time court-authorized wiretaps have been used to target significant insider trading on Wall Street.
The case encompasses alleged use of inside information to trade a range of stocks, including Google, Clearwire, and Hilton Hotels. The charges include illicit profits for Galleon and other hedge funds, and also in a personal account owned by Mr. Goel.
Someone identified only as a "cooperating witness" played a key role. For example, the cooperating witness learned from a Moody's analyst in July 2007 that Hilton was going to be taken private. Using information from the witness, the FBI says, Rajaratnam bought hundreds of thousands of shares of Hilton stock for Galleon, reaping profits of about $4 million for the fund.
Cases of alleged fraud have surfaced in the wake of last year's market dive, as often happens in bear markets. The illicit activities, though, often begin during boom times. In the hedge fund case, the FBI says illegal trading began early in 2006, well before the recession or market downturn.
News of the arrest came in a week when the Dow Jones Industrial Average crossed above 10000 for the first time in a year. The Dow ended Friday below 10000, at 9995.91.
Rajaratnam is also linked to Sri Lanka money-transfer case.
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