Maybe we are making too much of this, but when the SEC is on its 30th or so figurative lynching related to the Galleon rat case, does it really need to juice up its press releases in the hope of a tabloid pickup?
From the SEC IMMEDIATE RELEASE Read more
Rajat Gupta, former boss of McKinsey and Goldman Sachs board member, on Wednesday morning surrendered to the FBI, pending criminal charges for insider trading.
This would be a big scalp for the Feds — bigger even than that of Gupta’s friend, Raj Rajaratnam, who went down last month. Gupta is one of the most connected people in business and, if convicted, would arguably make for the most high profile conviction in insider trading history. Read more
Raj Rajaratnam has given his first interview since being sentenced to 11 years in prison for insider trading. Like the trial itself, it’s an odd mix of money, family, cop cliches and immigrant networks.
There’s some astrological claptrap thrown in, too. Read more
On 11 May former Galleon boss Raj Rajaratnam was convicted on all 14 counts of alleged securities fraud and conspiracy. He was in court in New York on Thursday to receive his sentence:
RTRS – US JUDGE SAYS INTENDS TO SENTENCE FUND MANAGER RAJ RAJARATNAM TO 11 YEARS IN PRISON FOR INSIDER TRADING – COURT HEARING Read more
McKinsey & Co will not know for 20 years what damage the Galleon insider trading scandal has done to its brand, the head of the management consultancy has told the FT, describing the case – in which two of its senior executives were caught up – as “incredibly distressing and embarrassing”. Clients had been very supportive, Dominic Barton, McKinsey’s global managing director, said in his fullest public comments on the affair, pledging to make the organisation stronger. Anil Kumar, a former McKinsey partner, has pleaded guilty to charges of providing confidential information to Raj Rajaratnam, the ex-head of the Galleon Group hedge fund who was found guilty in May in a landmark insider trading case.
George Packer has written nearly 11,000 words on financial crime for this week’s New Yorker. Like most New Yorker articles, it’s an exercise in curious ambivalence and worth a read if you have a spare half hour. (Although we still prefer Packer’s essay on the absurdity of the US Senate.)
The essay has two narratives disguised as one. First, a play-within-a-play account of the Galleon trial, featuring an interview with Preet Bharara, the US Attorney for the Southern District of New York. Second, a reflection on what this trial tells us about insider trading more widely, and the lack of financial crisis prosecutions. Or, why it’s all Grisham and no Taibbi. Read more
Zvi Goffer, a former Galleon Group trader nicknamed Octopussy, and two others have been found guilty of insider trading, handing the US government another conviction in its expansive probe into corruption on Wall Street, the FT says. Goffer stood trial with his brother Emanuel Goffer and Michael Kimelman, a former trader, accused of trading ahead of corporate takeover announcements of which they learnt from two Ropes & Gray lawyers advising the companies on the deals. Author Joe Nocera at the New York Times asks why Galleon investors have “been able to keep every ill-gotten penny.”
Zvi Goffer, a former Galleon Group trader nicknamed Octopussy, and two others have been found guilty of insider trading, handing the US government another conviction in its expansive probe into corruption on Wall Street, reports the FT. Mr Goffer stood trial with his brother Emanuel Goffer and Michael Kimelman, a former trader, accused of trading ahead of corporate takeover announcements of which they learnt from two Ropes & Gray lawyers advising the companies on the deals.
Following the conviction of Galleon Group founder Raj Rajaratnam in a Manhattan federal court on Wednesday, federal prosecutors will shift their focus to expert networks — the web of money managers, executives and consultants at the centre of another wave of insider trading cases, reports DealBook. In recent years, the Justice Department has built dozens of insider trading cases, involving the hedge fund industry. Prosecutions have developed mainly along two tracks. One aimed at Rajaratnam and the network he built up around the Galleon group; the other focusing on expert network firms, the “matchmakers” who connect large investors with outside experts. And, adds the FT, lawyers expect the trend of using wiretaps to gain information, as in the Galleon case, to continue.
Raj Rajaratnam, the hedge fund billionaire, was on Wednesday convicted of insider trading, in a key victory for the US government’s campaign against corruption on Wall Street, reports the FT. On the 12th day of deliberations in a Manhattan federal court, the jury convicted the former head of Galleon Group on all 14 counts of securities fraud and conspiracy. He was found guilty of making $63m on inside information about earnings and corporate takeovers. In a separate report, the FT says the trial was a drama “worthy of Hollywood” DealBook says the conviction is likely to embolden US prosecutors in their pursuit of insider cases, while DealJournal traces the flow of insider information to Rajaratnam.
Raj Rajaratnam, the hedge fund billionaire, has been convicted of insider trading, handing the US government its biggest victory in a generation in its campaign to root out corruption on Wall Street, reports the FT. On their 12th day of deliberations, the jury of eight women and four men convicted the former head of Galleon Group on all 14 counts of securities fraud and conspiracy. He was found guilty on Wednesday of making $63m by trading on inside information about earnings announcements and corporate takeovers.
Q: What sentence awaits Raj Rajaratnam?
A: You tell us. Put your best guess in the comments below and the winner receives a mystery prize. (So mysterious we don’t know what it is yet.) Read more
After a deliberation length that would make Henry Fonda blush, Raj Rajaratnam has been found guilty on all 14 counts of conspiracy and securities fraud. Bernie could now have a cell mate.
From the FT, which also has a batch of instant analysis: Read more
Jonathan Macey, a law professor at Yale University, has an op-ed in Tuesday’s WSJ arguing that the SEC’s definition of insider trading is too strict and at odds with Supreme Court precedent. (Hat tip Stacy Marie-Ishmael.)
Using the ongoing Galleon case as an example, Macey says there is an important distinction between Raj Rajaratnam allegedly bribing Rajiv Goel for tips on Clearwire and other allegations that “accuse Mr. Rajaratnam of simply talking to people and then trading”. Read more
Attorneys for Raj Rajaratnam have rested their case in his insider trading trial, without calling the Galleon founder to the stand, the WSJ reports. Although people close to Rajaratnam said he had told them he would testify after his arrest, calling the main defendant is relatively rare given the risks from cross-examination. Prosecutors responded to the defence on Monday by playing a new recording of phone conversations between Rajaratnam and Danielle Chiesi, a former Bear Stearns hedge fund manager, in which the two discuss trading in Advanced Micro Devices. The prosecution alleges that Rajaratnam received insider tips about AMD.
For the commute home, where the carry trade means helping your better half unload the car in exchange for first dibs on the remote,
- The FT visits Bernie Madoff. Read more
US prosecutors allege that Raj Rajaratnam, co-founder of Galleon Group, made more than $63m in trading profits or averted losses, by trading on inside information he received on about 15 companies, reports the FT. The government rested its case on Wednesday after five weeks of testimony from 18 witnesses, including three individuals who admitted giving Rajaratnam secret company information before it was publicly announced. The government did not call Roomy Khan, a long-time associate of Rajaratnam who allegedly passed secret information from three companies. Lawyers for Rajaratnam on Monday will begin their case, which is expected to last one week before the case goes to the jury for a verdict.
Raj Rajaratnam, the hedge fund billionaire on trial for allegedly profiting from trading on inside information, made more than $2m in profits after a tip that Integrated Circuit Systems was selling the company, according to trading records and a government witness, reports the FT. In the fourth week of the trial, jurors heard from a company executive, a business school classmate and Adam Smith, a former Galleon portfolio manager, who all testified they shared secret information about company earnings and takeover talks with Rajaratnam. Smith, who has pleaded guilty to securities fraud, testified on Thursday that he tipped Rajaratnam that Integrated Device Technology was in talks to acquire ICS in early 2005.
Prosecutors on Wednesday played a recorded phone call in which Raj Rajaratnam, the founder of Galleon Group, is heard telling a colleague that he learnt from a Goldman Sachs board member that the bank would report a quarterly loss, reports the FT. The recording played on Wednesday in the fourth week of the government’s insider trading trial against the hedge fund billionaire, is among the strongest evidence presented so far in its case. Prosecutors allege Rajaratnam was tipped off by Rajat Gupta, then a Goldman board member and former head of McKinsey, about a $5bn investment by Warren Buffett and that the bank would report its first loss as a publicly traded company in late 2008. The WSJ notes that Wednesday’s hearing gave a view into how Galleon carried out its self-described mission to “arbitrage reality with consensus,” according to internal company documents shown during the trial.
Lloyd Blankfein, chief executive of Goldman Sachs, said that a former board member at his bank violated bank confidentiality when talking to Raj Rajaratnam, the billionaire Galleon fund manager accused of insider trading, the FT reports. Prosecutors allege that Rajat Gupta, the former Goldman Sachs board member, relayed secret information about Goldman’s earnings and strategy, often just minutes after board meetings, to Mr Rajaratnam, who then traded on it. Mr Blankfein said that the board approved the investment during a special meeting on September 23, 2008. The investment was “significant” for the bank, he said, adding “the implication of his investment means we were a good investment”. Reuters reports that in a show of courtesy for the accused hedge fund founder Blankfein did however extend his hand to Rajaratnam in 30-second encounter.
Lloyd Blankfein, chief executive of Goldman Sachs, told a US court that a former Goldman board member violated bank confidentiality when talking to Raj Rajaratnam, the billionaire Galleon fund manager accused of insider trading, reports the FT. Prosecutors allege that Rajat Gupta, the former Goldman board member, relayed secret information about the bank’s strategy, often just minutes after board meetings, to Rajaratnam, who then traded on it. Prosecutors allege Gupta tipped off Rajaratnam about Warren Buffett’s $5bn investment in Goldman amidst the financial crisis. Blankfein said the board approved the investment at a meeting on Sept 23, 2008. DealBook meanwhile looks at Blankfein’s starring role in the trial.
US prosecutors intend to call Lloyd Blankfein, the head of Goldman Sachs, as a witness in the insider trading trial of Raj Rajaratnam, according to a letter sent on March 21 to the presiding judge, reports the FT. The prosecutors expect Blankfein to testify about Goldman board meetings in 2008 relating to earnings and a $5bn investment the bank received from investor Warren Buffett. Prosecutors have alleged Rajat Gupta, then a Goldman director, passed inside information to Rajaratnam just minutes after the board meetings. Gupta was sued by the SEC regulator for allegedly tipping Rajaratnam but denies wrongdoing. He has not been charged criminally. Regardless of the substance of Blankfein’s testimony, says DealBook, his presence on the witness stand “will add to the already intense attention surrounding the prominent trial”.
Raj Rajaratnam, the hedge fund billionaire on trial for alleged insider trading, told a friend the price an Indian company offered to pay for PeopleSupport days before a deal for the US outsourcing specialist was announced, according to a phone call played by prosecutors, reports the FT. Prosecutors have alleged that Rajaratnam, founder of the Galleon Group, made more than $45m in illegal profits by trading on secret company information he gleaned from friends and business associates. His lawyers have argued that some information was already public or the information was not meaningful. Rajaratnam has denied any wrongdoing.
A Goldman Sachs director told Raj Rajaratnam, founder of the Galleon Group, that the investment bank had discussed buying a commercial bank in July 2008, according to a taped phone call played in the hedge fund manager’s insider trading trial, reports the FT. Prosecutors played a recording in which Rajat Gupta, the former McKinsey chief who sat on the Goldman board, answered a question from Rajaratnam about market rumours. At the time, Gupta was in discussions to become chairman of Galleon’s international fund and had sought a larger role in the hedge fund group, according to witness testimony. The jury also heard Rajaratnam say that he might pay Gupta with a large stake in the fund, and that Rajaratnam loaned Gupta money so he could increase his investment in a Galleon fund.
Anil Kumar, a former McKinsey partner, testified that he shared client secrets with Raj Rajaratnam, the founder of Galleon Group, because he felt obligated to him after agreeing to accept $500,000 a year in consulting fees, reports the FT. Kumar’s testimony, which is expected to continue for several days, came on the first day of Rajaratnam’s federal trial on insider trading charges. Earlier in the day, prosecutors placed photos of Kumar and two other co-conspirators on a board facing the jury. Kumar has pleaded guilty to securities fraud and is co-operating with the government in hopes of a lighter prison sentence. He has agreed to forfeit $2.7m in fees and profits he received from Galleon.
US federal prosecutors on Wednesday said their case against Raj Rajaratnam boiled down to his “greed and corruption” and accused the former Galleon Group hedge fund manager of using influential business associates to gather secret company information and use it to reap illegal profits, reports the FT. In the opening of the insider trading trial of the hedge fund billionaire, Jonathan Streeter, an assistant US attorney, said in the government’s opening salvo that Rajaratnam used tips from friends and associates to gain “an illegal advantage over ordinary investors in the stock market”. John Dowd, an attorney for Rajaratnam, replied that his client was merely conducting research for clients. The trial, expected to last more than two months, will be decided by a jury of five men and seven women.
Goldman Sachs’ two top executives, Lloyd Blankfein and David Viniar, CEO and CFO respectively, were among names on a list of potential witnesses read out at the start of the insider trading trial of hedge fund billionaire Raj Rajaratnam, co-founder of Galleon Group, reports the FT. The list, featuring people and companies that may be mentioned in the trial or called as witnesses, also included Hector Ruiz, former CEO of Advanced Micro Devices, and Sam Miri, a former Marvell Technology executive. Kamal Ahmed, a Morgan Stanley banker, was also named, and identified in court papers as a banker who allegedly tipped former Galleon employee Adam Smith about a merger. Smith pleaded guilty to tipping Rajaratnam. Judge Richard Holwell, who is overseeing the trial in New York, read the list to more than 100 prospective jurors as he began reducing the group to 12 jurors and six alternates who will sit for the two-month trial. Judge Holwell said he expected the jury to be seated on Wednesday, with opening statements from the government and defence to follow.
Nearly 18 months after his arrest, Raj Rajaratnam, the hedge fund billionaire, will face his accusers at a high-stakes, criminal insider trading trial this week, the FT reports. The drama, which begins on Tuesday with the jury selection, is expected to unfold over two months, with prosecutors from the US Attorney’s office in Manhattan, aiming to prove that Mr Rajaratnam, co-founder of Galleon Group, made more than $45m in illicit profits by trading on insider information. Hours of recorded phone calls are expected to be among key evidence. Mr Rajaratnam’s decision to testify on his own behalf, by contrast, may prove one of his biggest gambles, says the WSJ.
US prosecutors plan to play recorded phone calls between hedge fund billionaire Raj Rajaratnam and several Galleon Group employees to bolster allegations that he traded on inside information, reports the FT. In one call, Rajaratnam allegedly tells a Galleon employee he was “told by a board member of Goldman Sachs” that the bank would probably report its first loss as a public company, prosecutor Jonathan Streeter said at a hearing on Friday. Streeter said the call was made after Rajaratnam received a tip from Rajat Gupta, former head of McKinsey and a Goldman board member. Prosecutors have not charged Gupta with wrongdoing, but described him as a co-conspirator. The SEC has filed civil insider trading charges against Gupta. Rajaratnam, who appeared in court on Friday, has denied any wrongdoing. The criminal insider trading trial of Rajaratnam starts on Tuesday.
One of the best-known executives on Wall Street could be picked up as a surprising government witness at the high-profile criminal trial of Raj Rajaratnam, the Wall Street Journal reports. People familiar with the matter have told the paper that Goldman Sachs’s CEO Lloyd Blankfein has agreed to testify on behalf of the US government at the upcoming trial of Rajaratnam, the billionaire hedge-fund manager and founder of the Galleon Group, who is facing 14 counts of securities fraud and conspiracy in one of the largest insider-trading cases of a generation. Another 26 defendants in the case have already pleaded guilty. According to the paper, Blankfein could establish an important link between information shared among Goldman board members and executives with the former Goldman director Rajat Gupta. Prosecutors are alleging that Rajaratnam obtained this inside information about Goldman in October 2008. A separate civil administrative proceeding filed this week saw the Securities and Exchange Commission allege that Gupta had passed along inside information about Goldman to Rajaratnam.