SEC Charges Billionaire, Tech Execs in Vast Insider-Trading Scheme

October 17, 2009

(ChattahBox) — Still stinging from criticism that they missed frauds like Bernie Madoff, six high-level figures in the hedge fund world were arrested and  accused by prosecutors and the Securities and Exchange Commission of earning more than $20 million from illegal trading, in the biggest insider-trading ring in a generation. Hedge funds are open only to institutions and wealthy individuals and employ a wider range of trading activities than other investment funds. Sri Lankan native Raj Rajaratnam  a supposed self-made billionaire who the world’s 559th richest person, according to Forbes magazine, and founder of the New York-based Galleon Group hedge fund, is accused of being the ringleader of a group. He was picked up as he prepared to board a flight from New York’s Kennedy airport to London after becoming suspicious, according to prosecutors, that the FBI was on his tail.  Rajaratnam was charged with 13 criminal counts of fraud and conspiracy.

The network of informants include a senior official at I.B.M. Robert Moffat, 53, considered a contender for the top job at that firm; executives of Intel Rajiv Goel, 51, and the consulting firm McKinsey & Company Anil Kumar, 51; two former Bear Stearns employees who had moved to a hedge fund, New Castle Partners, named as Danielle Chiesi, 43, and Mark Kurland, 60; and an analyst at Moody’s Investors Service. The group’s information network spread deep enough that Rajaratnam and his associates could gain inside information on companies like Google, Akamai, Sun Microsystems, and Hilton Hotels, off of whom Galleon Technology Funds made $4 million after Blackstone took the hotel chain private. One main player according to the NY Times, in the scheme was Danielle Chiesi, a former Bear Stearns executive who worked at another hedge fund, New Castle Partners. She is accused of supplying tips about companies like Akamai and Sun Microsystems to Mr. Rajaratnam and of illegally trading on the information for her firm. The criminal complaint relies heavily on phone wiretaps,some recorded by a cooperating witness, as yet unnamed, who is said to be a former Galleon employee, which show Rajaratnam and his alleged accomplices operating under a high degree of secrecy: “I’m dead if this leaks,” says co-defendant Danielle Chiesi in one recording, “and my career is over. I’ll be like Martha f—ing Stewart.”


5 Responses to “SEC Charges Billionaire, Tech Execs in Vast Insider-Trading Scheme”

  1. Steve Dale on October 17th, 2009 8:16 am

    My rant –

    – This is testament to the weak financial system on Wall Street and, of course, greed.

    – Why someone who is already a billionaire needs “more” is beyond me. Unless he wanted to game the system.

    – And, it certainly looks like the Madoff-fiasco has set the Feds on a course to find and stop such activity – which, of course, will not stop even with heavy incarceration as a deterrent.

    – My hat is off to the Feds on this one.

  2. j3161usa on October 17th, 2009 8:29 am

    Greed is Good. How much is enough? It’s never enough! I want more, more, more! Hell is waiting, your soul is lost. Oh, and uh, see ya, and I wouln’t wanna be ya!

  3. keen observer on October 18th, 2009 4:59 am

    The linking of Martha Stewart to the Rajaratnam criminal complaint on insider trading was a scurrilous political attack on Martha Stewart by Obama and his federal goons that he recruited from the Bush Administration, which targeted her destruction on bogus charges for political gain. This proves Obama’s promise of “no more Bush” on the campaign trail was completely bogus; the reality is Obama is four more years of Bush.

    Obama’s deplorable, baseless attack on Martha Stewart in linking her to this criminal insider trading case only shows that his campaign talk about “change” was a complete fraud and just as empty and meaningless as the Nobel Peace Prize he was given.

    Martha Stewart was involved in no insider trading; she was never charged with criminal insider trading; she made a perfectly legal small-time, personal stock sale and was railroaded in a bogus conviction on bogus charges that had nothing to do with insider trading. Martha Stewart was of no relevance for her name to be invoked in this criminal complaint; there was no justification for her name to be invoked in the criminal complaint except for sensational media publicity and political gain. President Barack Bush and the Bush federal goons he recruited are no different from the rogue Bush administration.

    Mainstream media have certainly functioned as state propagandists for Obama and his Bush goons in their media assault on Martha Stewart.

  4. random on October 18th, 2009 11:58 am

    the martha stewart thing was put there because danielle chiesi comparied herself to her like the way she went to jail not what that idot keen observer said because hes obviously not a keen observer if he didnt see that

    you can have oppinions but only if there atleast a little close to reality seriously thats way out there…

  5. keen observer on October 19th, 2009 6:39 pm

    “comparied herself to her” was no justification for including the foul language and attack on Martha Stewart in the criminal indictment. There was no basis for any comparison between this woman and Martha Stewart, who was involved in no criminal conduct that this woman was involved in. Martha Stewart was of absolutely no relevance to this woman’s criminal conduct for her name to be invoked in the criminal indictment; the name of Martha Stewart was of no relevance to the criminal charges against this woman. The name of Martha Stewart was intentionally and deliberately included for maximum political gain by President Barack f—ing Obama and his Bush goons, and this was an abuse and misuse of presidential and governmental powers. Only a total idiot, and a brainwashed, servile moron can think there was any justification for Ms. Stewart’s name with the foul attack on her to be invoked in this criminal indictment.

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