Billionaire Galleon Group Founder Arrested for Insider Trading

Raj Rajaratnam, the founder of the $7 billion Galleon Group and portfolio manager for the Galleon Technology Funds was arrested in his apartment last night and charged with insider trading in the stocks of several companies, including Hilton Hotels (NYSE: HLT), Advanced Micro Devices (NYSE: AMD), Clearwire (NASDAQ: CLWR) Google (NASDAQ: GOOG) and Akamai Technologies (NASDAQ:AKAM), according to a complaint filed in Manhattan federal court today.

Prosecutors, who have been investigating the case since at least March 2008, allege that Rajaratnam, between January ’06 and July ’07, illegally obtained nonpublic information about several securities and caused Galleon Technology Funds to make improper trades on that information. As a result, Rajaratnam’s fund raked in more than $12.7 million.

A number of other individuals were named in the complaint, including an executive from Intel Corp. (NASDAQ:INTC) ; a director at global management-consulting firm McKinsey & Co. ; and a senior vice president at International Business Machines Corp (NYSE:IBM).

Rajaratnam, a Wharton MBA and a Sri Lankan Tamil by birth, was identified this year by Forbes as the 559th richest person in the world, with a net worth of $1.3 billion.

All the defendants have been arrested and will appear in the Manhattan court today.

CNBC’s David Faber broke the story.

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