Six ‘Privileged Wall Street Insiders’ Charged in Huge Insider-Trading Scheme

October 16, 2009

(ChattahBox)—Six white-collar insiders, associated with the funds Galleon, New Castle and Intel’s Intel Capital unit, were charged in the largest ever hedge fund insider-trading scheme on Friday. Galleon Group founder Raj Rajaratnam was among those charged, who is the richest Sri Lankan in the world and one of the largest investors on the Colombo Stock Exchange.

According to U.S. prosecutors, the FBI and the SEC, the scheme generated profits of more than $20 million over several years, as detailed in complaints filed in U.S. District Court in New York.

The accused hedge funds engaged in insider trading offenses involving shares of Hilton Hotels Corp, Google Inc, IBM, Advanced Micro Devices Inc and other stocks.

Raj Rajaratnam of Galleon group stands accused of conspiring with Intel employee Rajiv Goel and Anil Kumar, a director of the management consulting firm McKinsey & Co. According to the complaint, Galleon had as much as $7 billion under management.

U.S. Attorney Preet Bharara held a news conference announcing the arrests, comparing the case to mob and drug cartel prosecutions.

“It shows that we are targeting white-collar insider trading rings with the same powerful investigative techniques that have worked so successfully against the mob and drug cartels,” said Bharara.

The tough talking federal prosecutor warned Wall Street that he would be watching them like a hawk:

“Today, tomorrow, next week, the week after, privileged Wall Street insiders who are considering breaking the law will have to ask themselves one important question: Is law enforcement listening?” he said.

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