Strategic CIO // IT Strategy
News
10/16/2009
04:11 PM
Connect Directly
RSS
E-Mail
50%
50%

Tech Investors, Execs Charged With Insider Trading

Prosecutors allege trades were made based on insider information about Akamai Technologies, AMD, Google, IBM, Polycom, and Sun Microsystems.

Billionaire Raj Rajaratnam, who rode his hedge fund to $7 billion in assets by betting primarily on high technology and health care stocks, was arrested Friday along with five others and charged with insider trading. Many of their trades in high tech stocks were based on illegally obtained information, prosecutors alleged.

Rajaratnam, a partner in Galleon Management and a portfolio manager for Galleon Group, was accused of conspiring with the five other defendants to produce more than $20 million in profits by receiving insider information on several companies including Akamai Technologies, AMD, Google, IBM, Polycom and Sun Microsystems.

A native of Sri Lanka and a graduate of the Wharton School of Finance and Business, Rajaratnam is listed as the 236th richest American by Forbes Magazine.

The complaint has been filed in U.S District Court, Southern District of New York and prosecutors outlined the charges at a press conference in Manhattan on Friday. The Securities and Exchange Commission also filed charges against the six.

"Raj Rajaratnam is not a master of the universe, but rather a master of the rolodex," said Robert Khuzami, the SEC's Division of Enforcement director, in a statement. "He cultivated a network of high-ranking corporate executives and insiders, and then tapped into this ring to obtain confidential details about quarterly earnings and takeover activity."

The SEC added that Rajaratnam, who compiled an enviable string of trading and investment banking profits betting on high tech companies, doesn't deserve his reputation for "genius trading strategies" or astute study of company fundamentals or marketplace trends."

According to media reports, others named in the complaint included Rajiv Goel, 51, an executive at Intel Capital; Anil Kumar, 51, an executive at McKinsey & Co., Robert Moffat, 53, an IBM executive; and Danielle Chiesi, 43, and Mark Kurland, 60, both of whom were affiliated with a Bear Stearns unit. None of the defendants and attorneys representing them was immediately available for comment.

Prosecutors said they began investigating the case as far back as November of 2007.


The InformationWeek/bMighty Data Centers For Growing Companies virtual event explores the latest technology and tools you can use to manage your growing IT needs. Oct. 21, 2009. Find out more and register.

Comment  | 
Print  | 
More Insights
Transformative CIOs Organize for Success
Transformative CIOs Organize for Success
Trying to meet today’s business technology needs with yesterday’s IT organizational structure is like driving a Model T at the Indy 500. Time for a reset.
Register for InformationWeek Newsletters
White Papers
Current Issue
InformationWeek Tech Digest - July 22, 2014
Sophisticated attacks demand real-time risk management and continuous monitoring. Here's how federal agencies are meeting that challenge.
Flash Poll
Video
Slideshows
Twitter Feed
InformationWeek Radio
Archived InformationWeek Radio
A UBM Tech Radio episode on the changing economics of Flash storage used in data tiering -- sponsored by Dell.
Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.