Raj Rajaratnam of Galleon Group, ex-Bear Sterns directors, others charged in insider trading

In a case echoing the scandals of the 1980s, federal authorities exposed what they claim is the biggest insider-trading ring in a generation -- a conspiracy in which a hedge-fund kingpin and executives at blue-chip firms including IBM and Intel allegedly connived to profit on Google and other big-name stocks.

At the center was Raj Rajaratnam, founder of Galleon Group, a New York-based fund firm that manages $3.7 billion. A native of Sri Lanka, he spent years carving a reputation as a meticulous investor in technology stocks, building a fortune estimated at $1.5 billion.

Rajaratnam, 52, faces 13 fraud and conspiracy counts, many of which carry 20-year maximum sentences. Under federal sentencing guidelines, he faces 10 years in prison if convicted at trial, Assistant U.S. Attorney Josh Klein said in court yesterday. Galleon Partners, based in Manhattan, has offices in London, Singapore, Mumbai, and Menlo Park, California.

$20 Million Scheme

Also arrested in the alleged $20 million scheme were Rajiv Goel, who worked at Intel Capital as a director in strategic investments, Anil Kumar, who worked as a director at McKinsey & Co., and IBM Corp. executive Robert Moffat. The former officials at Bear Stearns Asset Management are Danielle Chiesi and Mark Kurland, who were affiliated with the firm’s New Castle Partners, which managed about $1 billion. Prosecutors called it the biggest insider trading case involving hedge funds.

“The defendants operated in a world of, you scratch my back, I’ll scratch your back,” Bharara said at a press conference yesterday. “Greed, sometimes, is not good.”

He said the prosecution is the first time wiretaps have been used to target insider trading, calling the case “unprecedented.”

Galleon, which started as a hedge fund firm focusing on technology and health-care stocks, grew to more than $5 billion in 2001 from its start in January 1997. Rajaratnam founded Galleon with three other colleagues from Needham & Co., an investment bank that focused on technology and health-care companies.

Oversaw $2.6 Billion

Galleon Management, the company’s advisory business, oversaw more than $2.6 billion at the end of March, mostly on behalf of hedge funds, according to regulatory filings it submitted to the U.S. Securities and Exchange Commission at the time. Rajaratnam held a 50 percent to 75 percent controlling stake, according to the documents.

#559 on Forbes World's Billionaires list

http://www.forbes.com/lists/2009/10/billionaires-2009-richest-people_Raj-Rajaratnam_RUQ2.html

Net Worth:$1.3 bil
Fortune:self made
Source:hedge funds
Age:51
Country Of Citizenship:United States
Residence:New York, New York
Industry:Finance
Education:University of Sussex, Bachelor of Arts / Science, University of Pennsylvania Wharton School, Master of Business Administratio
Marital Status:married, 3 children

Hedge fund guru's tech focus helped shore up his returns: flagship fund down 17% in 2008. Father ran Asian operations for singer Sewing Co. Sri Lanka native studied engineering at U. of Sussex in England, then M.B.A. at Wharton 1983. Early career at investment banking boutique Needham & Co. Became president in 1991. Founded hedge fund Galleon Group 6 years later; making big bets on health care, technology companies. Annual returns: 22% net of fees since inception. Today firm is believed to manage $6 billion across 6 funds.