It's the stuff you see in the movies. Federal prosecutors on Friday charged six money manager and hedge-fund operators with conspiracy and securities fraud, alleging these people earned millions from insider trading of high-tech firms that include Intel, Google and Clearwire.
Among those arrested by federal authorities were Raj Rajaratnam, founder of the New York hedge fund Galleon Group; Rajiv Goel, an executive at Intel's treasury department; and Anil Kumar, an executive at the global consulting group Mc-Kinsey & Co. Also charged were Mark Kurland, president of New Castle Partners; Danielle Chiesi, a former Bear Stearns executive who now works at New Castle; and Robert Moffatt, an IBM executive.
Using court-authorized wiretaps, federal authorities tapped Rajaratnam's phone and relied on tipsters and other informants from hedge funds, investment firms and the companies themselves. Prosecutors in New York accused Rajaratnam with illegally obtaining and trading on information on several high-tech companies from January 2006 to October 2008. One big payoff was Google. Rajaratnam obtained information that the company's earnings were going to drop so he cashed in to a tune of $8 million in profit.
Clearwire was another company that was targeted. Goel, the executive at Intel's treasury department, is accused of giving Rajaratnam information about the planned $3.2 billion investment Intel, Google, Comcast, Time Warner Cable, Bright House Networks and Trilogy Equity Partners were going to make in the WiMAX operator months before it was announced. The plan was to have Galleon Technology Funds buy up Clearwire stock in advance and make a nice profit once the stock saw a lift on the news.
The news broke early to the media but Galleon still managed to buy and sell enough Clearwire stock by the time the deal was officially announced May 7 to earn $579,000, the complaint alleges.
- see this Mercury News article
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