Galleon Hedge Fund Case: New Developments and Criticism

Strategic Insights -

Former IBM senior VP Robert Moffat and Intel finance exec Rajiv Goel continue to avoid indictment in the Galleon hedge fund case, despite evidence of their involvement in insider trading. The prosecution's case has been weighed down by the decision of McKinsey & Co partner Anil Kumar to turn state's evidence, revealing that Galleon CEO Raj Rajaratnam paid him between $1.75 million and $2 million for insider information. This new revelation raises the amount of money Rajaratnam allegedly obtained illegally from $25 million to over $52 million.

Key Takeaways:

  • McKinsey & Co partner Anil Kumar has turned state's evidence and pleaded guilty to securities fraud and conspiracy to commit securities fraud.
  • Kumar confessed that Galleon CEO Raj Rajaratnam paid him between $1.75 million and $2 million for insider information.
  • The SEC is seeking to add this revelation to the civil charges already lodged against Rajaratnam, Kumar, and other defendants.
  • Mark Kirkland, co-founder of the former Bear Stearns hedge fund New Castle, is finalizing a plea deal and is expected to testify.
  • Kirkland was Danielle Chiesi's boss, who alleged had Moffat and ex-AMD CEO Hector Ruiz whispering secrets in her ear.
  • Robert Moffat's lawyers are trying to get the government to drop the case against him and avoid indictment altogether.
  • Dell sales figures in 2006 were discussed by former AMD CEO Hector Ruiz and Danielle Chiesi, allegedly as part of a tip-sharing system.

Statistics:

  • $1.75 million to $2 million: The amount of money Rajaratnam allegedly paid to Anil Kumar for insider information.
  • $25 million: The initial amount of money allegedly obtained illegally by Rajaratnam.
  • $52 million: The revised amount of money Rajaratnam allegedly obtained illegally after Anil Kumar's confession.
  • $52 million: The total amount of money allegedly obtained illegally by Rajaratnam, including the $25 million and the additional $27 million after Kumar's confession.

Sources:

  • "Newcastle faces suit for allegedly taking part in insider trading".
  • "IBM, AMD and Sun posts among many suspects".
  • "Government to review Israeli witness in Galleon probe".
  • "SEC case foiled by clients on tape".