Prosecutors accused on Friday a hedge-fund manager on charges of conspiracy and securities fraud.
Raj Rajaratnam is the Sri Lankan-born founder of Galleon Management LP, which churned out impressive gains since the firm's founding in 1997, making the 52-year-old Mr. Rajaratnam a billionaire, the Wall Street Journal reported. He was respected for his charitable work and willingness to pick up the phone and answer calls from even his smaller investors.
"It's quite shocking to me," Mike Napoli of Absolute Return Group, a Los Angeles firm that invests in hedge funds and met with Mr. Rajaratnam in the past, told the WSJ. "There were no clues this could happen, he gathered a collection of trading talent with a lot of integrity and he is a star -- and his star hadn't fallen, he was highly regarded."
Galleon manages $3.7 billion, according to a company spokesman managing as much as $7 billion a few years ago, an investor told the WSJ.
Six people were arrested and accused by prosecutors and the Securities and Exchange Commission of earning more than $20 million from illegal trading in companies like Google, Akamai and Hilton Hotels over nearly three years, the N.Y. Times reported.
Mr. Rajaratnam is accused of tapping a vast network of informants across a swath of corporate America: a senior official at I.B.M. considered a contender for the top job at that firm; executives of Intel and the consulting firm McKinsey & Company; two former Bear Stearns employees who had moved to a hedge fund, New Castle Partners; and an analyst at Moody’s Investors Service, the N.Y. Times reported.
“This case should serve as a wake-up call for Wall Street,” Preet Bharara, the United States attorney for the Southern District of New York, said at a news conference on Friday, according to the N.Y. Times. He added that the investigation was continuing.
These various scandals with hedge fund companies are becoming a more common thing as time passes. I think it is very for such companies to handle such a large amount of money to be tightly regulated. Getting away with a million extra dollars is a small amount consider the billions of dollars they handle. Therefore, it is easier for them to get away with it than other companies.
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