Raj Rajaratnam, IBM, ex-Bear Stearns executives and others arrested, charged in $20m insider trade case
Billionaire investor Raj Rajaratnam and present and former executives of Bear Stearns, IBM, Intel and McKinsey were charged on Friday in an alleged insider trading scheme that US prosecutors called the biggest ever involving hedge funds.
In a possible sign of escalating federal efforts to uncover white collar crime, Preet Bharara, US attorney in Manhattan, said the case marked the first time court-authorised wire taps – a traditional tool of investigators pursuing mob bosses and drug kingpins – had been used in a significant insider trading case.
Mr Bharara said the investigation, aided by an unnamed co-operating witness, was continuing. He said the charges “should be a wake up call for every hedge fund manager and every Wall Street trader and every corporate executive who is even thinking about engaging in insider trading”.
Prosecutors claimed Mr Rajaratnam, founder of the Galleon hedge fund, and others used insider information from sources inside hedge funds, public companies, Moody’s Investors Service and an investor relations firm to trade ahead of earnings announcements, acquisitions and joint venture deals.
The alleged scheme, which ran from 2006 until earlier this year, involved trades in companies including Google, IBM, Sun Microsystems and Hilton and produced profits of more than $20m, most of which went to Mr Rajaratnam, according to federal prosecutors. The Securities and Exchange Commission, which brought civil charges, put the proceeds of the scheme at more than $25m.
Source/Full Story: FT.com
Technorati Tags: Raj Rajaratnam, Bear Stearns, IBM, Intel, McKinsey



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