If you can’t trust hedge-fund managers, who can you trust? Six high-level figures in the business and finance worlds were arrested and charged on Friday with what authorities are describing as the biggest insider-trading ring in a generation. Sri Lankan native Raj Rajaratnam, founder of the New York-based Galleon Group, is accused of being the ringleader of a group that included IBM and Intel executives and profited by as much as $20 million in improper gains. The group’s information network spread far enough that Rajaratnam and his associates could gain inside information on companies like Google, Sun Microsystems, and Hilton Hotels—off of whom Galleon Technology Funds made $4 million after Blackstone took the hotel chain private. The criminal complaint relies heavily on phone wiretaps—some recorded by a cooperating witness, as yet unnamed, who is said to be a former Galleon employee—which show Rajaratnam and his alleged accomplices operating under a high degree of secrecy: “I’m dead if this leaks,” says co-defendant Danielle Chiesi in one recording, “and my career is over. I’ll be like Martha f—ing Stewart.”
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