Two Greenwich hedge fund traders among 6 arrested in $20M insider trading scheme
20643 CHjort 17/10 2009 15:26
Billionaire Among 6 Arrested in Insider Trading Case
Martin Zimmerman
The Associated Press- Updated: 10/17/2009 07:57:24 AM EDT
NEW YORK- Federal authorities shook the often secretive world of hedge funds with the arrests Friday of the billionaire founder of a major New York operation and five others on charges they ran an extensive insider-trading scheme that allegedly netted more than $20 million in illicit profits.
Taking the unusual step of using wiretaps in the investigation, authorities accused Raj Rajaratnam, the founder of the $7 billion hedge fund Galleon Group, two executives at California companies and three others of multiple counts of conspiracy and securities fraud.
It's the biggest criminal case involving hedge fund insider trading, said Preet Bharara, the U.S. attorney for Manhattan, and is believed to be the first time that court-authorized wiretaps have been used in insider-trading cases.
"This aggressive use of wiretaps is important. It shows that we are targeting white-collar insider trading rings with the same powerful investigative tools that have worked so successively against the mob and drug cartels," Bharara said.
Jacob Frenkel, a former federal prosecutor now in private practice, noted the trend: "In the aftermath of the financial crisis, we're seeing a re-direction of criminal enforcement attention toward Wall Street using aggressive methods."
Hedge funds are open only to institutions and wealthy individuals and invest in a wider range of trading activities than other investment funds.
The defendants included Rajiv Goel, 51, of Los Altos, Calif., managing director of strategic investments in Intel Corp.'s treasury division, and Anil Kumar, 51, of Santa Clara, Calif., a director at management-consulting giant McKinsey & Co.
Among the stocks the defendants traded in, according to authorities, were Google Inc., Advanced Micro Devices Inc. and Hilton Hotels Corp.
Separately, the Securities and Exchange Commission filed a civil complaint against the defendants. Together, the federal actions portray a cross-country ring in which highly placed executives passed on chunks of information gleaned from their jobs.
At the center was Rajaratnam, one of the world's wealthiest men. He is worth $1.3 billion and is the world's 559th richest person, according to Forbes magazine. His allegedly illegal trading earned $12.7 million for Galleon, authorities said.
"What we have uncovered in the trading activities of Raj Rajaratnam is that the secret of his success is not genius trading strategies," said Robert Khuzami, the SEC's enforcement chief. "Rajaratnam is not a master of the universe, but rather a master of the Rolodex."
An attorney for Rajaratnam couldn't be reached for comment.
His company released a statement saying it was "shocked" to learn of his arrest at his apartment. "We had no knowledge of the investigation before it was made public, and we intend to cooperate fully with the relevant authorities," the company said.
Goel was placed on administrative leave, said Intel spokesman Chuck Mulloy, and the Santa Clara, Calif., company launched an internal investigation. The federal actions create "a whole series of questions for us," such as whether its own stock was part of the insider-trading case, he said.
A McKinsey spokeswoman said the company was "distressed" to learn about Kumar's arrest and is looking into the matter "urgently." The company declined to elaborate, but a person with knowledge of the situation said Kumar, a senior partner working at McKinsey's Silicon Valley office, had been placed on administrative leave.
"Anil Kumar is as shocked as everyone who knows him to see his name on this complaint," Kumar's attorneys said in a statement, adding that their client "emphatically denies" the charges.
The other defendants are Danielle Chiesi and Mark Kurland of hedge fund NewCastle Partners in Greenwich, Conn., and Robert Moffat, a senior vice president in charge of server business for International Business Machines Corp. in Armonk, N.Y. Attorneys for Chiesi, Kurland and Moffat couldn't be reached.
According to the SEC, Goel gave Rajaratnam information about Intel's quarterly earnings and about a joint venture with Clearwire Corp., a wireless broadband technology company. In exchange, Rajaratnam made $250,000 by trading shares of Hilton and PeopleSupport Inc. in Goel's private account at Charles Schwab, the agency alleged.
The criminal case is based partly on information provided by an informant who had traded tips with Rajaratnam. The informant has pleaded guilty and agreed to wear a wire to record conversations with Rajaratnam.
Wiretaps are expensive and time-consuming, requiring FBI agents to listen to hours of phone calls.
"You don't see wiretaps used frequently in securities investigations," said Steve Peikin, the former head of the securities fraud unit at the Manhattan U.S. attorney's office. "The use of wiretaps reflects that the government thinks this is serious conduct involving a significant amount of money."
Among the conversations recorded was a July 2008 phone call in which Chiesi told Rajaratnam that Akamai Technologies Inc. in Cambridge, Mass., was going to lower its earnings projections.
"They're gonna guide down," Chiesi allegedly said. "I just got a call from my guy."
In a call a month later, Chiesi pressed Moffat to keep quiet about the information they were sharing about a reorganization at Advanced Micro.
"You put me in jail if you talk," Chiesi said. She added: "I'm dead if this leaks. I really am ... and my career is over. I'll be like Martha (expletive) Stewart."
Bharara said the use of wiretaps is a potent weapon that should make insiders consider whether the government is listening to them.
"As the defendants ... learned the hard way," he said, "they may have been privy to a lot of confidential corporate information, but there was one secret they did not know: We were listening."
Martin Zimmerman
The Associated Press- Updated: 10/17/2009 07:57:24 AM EDT
NEW YORK- Federal authorities shook the often secretive world of hedge funds with the arrests Friday of the billionaire founder of a major New York operation and five others on charges they ran an extensive insider-trading scheme that allegedly netted more than $20 million in illicit profits.
Taking the unusual step of using wiretaps in the investigation, authorities accused Raj Rajaratnam, the founder of the $7 billion hedge fund Galleon Group, two executives at California companies and three others of multiple counts of conspiracy and securities fraud.
It's the biggest criminal case involving hedge fund insider trading, said Preet Bharara, the U.S. attorney for Manhattan, and is believed to be the first time that court-authorized wiretaps have been used in insider-trading cases.
"This aggressive use of wiretaps is important. It shows that we are targeting white-collar insider trading rings with the same powerful investigative tools that have worked so successively against the mob and drug cartels," Bharara said.
Jacob Frenkel, a former federal prosecutor now in private practice, noted the trend: "In the aftermath of the financial crisis, we're seeing a re-direction of criminal enforcement attention toward Wall Street using aggressive methods."
Hedge funds are open only to institutions and wealthy individuals and invest in a wider range of trading activities than other investment funds.
The defendants included Rajiv Goel, 51, of Los Altos, Calif., managing director of strategic investments in Intel Corp.'s treasury division, and Anil Kumar, 51, of Santa Clara, Calif., a director at management-consulting giant McKinsey & Co.
Among the stocks the defendants traded in, according to authorities, were Google Inc., Advanced Micro Devices Inc. and Hilton Hotels Corp.
Separately, the Securities and Exchange Commission filed a civil complaint against the defendants. Together, the federal actions portray a cross-country ring in which highly placed executives passed on chunks of information gleaned from their jobs.
At the center was Rajaratnam, one of the world's wealthiest men. He is worth $1.3 billion and is the world's 559th richest person, according to Forbes magazine. His allegedly illegal trading earned $12.7 million for Galleon, authorities said.
"What we have uncovered in the trading activities of Raj Rajaratnam is that the secret of his success is not genius trading strategies," said Robert Khuzami, the SEC's enforcement chief. "Rajaratnam is not a master of the universe, but rather a master of the Rolodex."
An attorney for Rajaratnam couldn't be reached for comment.
His company released a statement saying it was "shocked" to learn of his arrest at his apartment. "We had no knowledge of the investigation before it was made public, and we intend to cooperate fully with the relevant authorities," the company said.
Goel was placed on administrative leave, said Intel spokesman Chuck Mulloy, and the Santa Clara, Calif., company launched an internal investigation. The federal actions create "a whole series of questions for us," such as whether its own stock was part of the insider-trading case, he said.
A McKinsey spokeswoman said the company was "distressed" to learn about Kumar's arrest and is looking into the matter "urgently." The company declined to elaborate, but a person with knowledge of the situation said Kumar, a senior partner working at McKinsey's Silicon Valley office, had been placed on administrative leave.
"Anil Kumar is as shocked as everyone who knows him to see his name on this complaint," Kumar's attorneys said in a statement, adding that their client "emphatically denies" the charges.
The other defendants are Danielle Chiesi and Mark Kurland of hedge fund NewCastle Partners in Greenwich, Conn., and Robert Moffat, a senior vice president in charge of server business for International Business Machines Corp. in Armonk, N.Y. Attorneys for Chiesi, Kurland and Moffat couldn't be reached.
According to the SEC, Goel gave Rajaratnam information about Intel's quarterly earnings and about a joint venture with Clearwire Corp., a wireless broadband technology company. In exchange, Rajaratnam made $250,000 by trading shares of Hilton and PeopleSupport Inc. in Goel's private account at Charles Schwab, the agency alleged.
The criminal case is based partly on information provided by an informant who had traded tips with Rajaratnam. The informant has pleaded guilty and agreed to wear a wire to record conversations with Rajaratnam.
Wiretaps are expensive and time-consuming, requiring FBI agents to listen to hours of phone calls.
"You don't see wiretaps used frequently in securities investigations," said Steve Peikin, the former head of the securities fraud unit at the Manhattan U.S. attorney's office. "The use of wiretaps reflects that the government thinks this is serious conduct involving a significant amount of money."
Among the conversations recorded was a July 2008 phone call in which Chiesi told Rajaratnam that Akamai Technologies Inc. in Cambridge, Mass., was going to lower its earnings projections.
"They're gonna guide down," Chiesi allegedly said. "I just got a call from my guy."
In a call a month later, Chiesi pressed Moffat to keep quiet about the information they were sharing about a reorganization at Advanced Micro.
"You put me in jail if you talk," Chiesi said. She added: "I'm dead if this leaks. I really am ... and my career is over. I'll be like Martha (expletive) Stewart."
Bharara said the use of wiretaps is a potent weapon that should make insiders consider whether the government is listening to them.
"As the defendants ... learned the hard way," he said, "they may have been privy to a lot of confidential corporate information, but there was one secret they did not know: We were listening."
19/10 2009 13:50 collersteen 2
20691 En længere uddybende artikel i dagens WSJ.
http://online.wsj.com/article/SB125591872194493517.html?mod=rss_whats_news_us_business
Overskriften er "Colleagues Finger Billionaire" som man evt. kan søge efter på google news, hvis ikke man kan læse artiklen.
Det er i mine øjne toppen af isbjerget og jeg er på sin vis stærkt forundret over at der ikke kommer flere af denne slags sager frem. Det kræver dog nok ret store ressourcer at løfte bevisbyrden i denne slags sager, hvilket vel illustreres af at man her har aflyttet telefoner gennem laaaaaaaaaang tid. Og det må være begrundelsen for at der ikke afsløres flere folk.
Med tanke på hvor griske folk er, er det simpelthen ufattelig at der ikke skulle være tusindvis af denne slags sager, fordi informationen simpelthen er så værdifuld.
Vi får at se hvad der sker fremover....
http://online.wsj.com/article/SB125591872194493517.html?mod=rss_whats_news_us_business
Overskriften er "Colleagues Finger Billionaire" som man evt. kan søge efter på google news, hvis ikke man kan læse artiklen.
Det er i mine øjne toppen af isbjerget og jeg er på sin vis stærkt forundret over at der ikke kommer flere af denne slags sager frem. Det kræver dog nok ret store ressourcer at løfte bevisbyrden i denne slags sager, hvilket vel illustreres af at man her har aflyttet telefoner gennem laaaaaaaaaang tid. Og det må være begrundelsen for at der ikke afsløres flere folk.
Med tanke på hvor griske folk er, er det simpelthen ufattelig at der ikke skulle være tusindvis af denne slags sager, fordi informationen simpelthen er så værdifuld.
Vi får at se hvad der sker fremover....
20/10 2009 21:55 collersteen 320742 Og her lidt til nørderne og til husarerne.
Lidt fra Cramer om sagen
http://www.cnbc.com/id/33382679
Og her selve anklageskriftet (vil jeg tro...uden at være kgl. edsvoren translatør i juridisk engelsk)
http://sec.gov/litigation/complaints/2009/comp21255.pdf
Fra side 10 og frem begynder detaljerne. Efter blot at have læst et par sider kan der næppe herske tvivl om at det er dybt kriminelt, det der har foregået....selvom man er uskyldig til det modsatte er bevist.
Se bl.a. Google-sagen på side 14 og frem, som gav over 9mio usd i kassen.
Der er det en medarbejder i et PR-bureau som har adgang til info om Google's earnings 9dage før de bliver frigivet...!!!
Så kan man så begynde at forestille sig hvor mange der ellers har haft adgang til den info..... og så gange op med antallet af børsnoterede virksomheder i USA... osv, osv osv osv. Der må være SÅ mange mennesker og hedge funds som laver kassen ulovligt på insiderviden. Alt andet vil simpelthen ikke give mening i et råt kapitalistisk samfund. Jeg begynder lidt at overveje om man som lille privat investor overhovedet kan overkomme den "edge" som en stor del (?) af markedet har, hvis det vitterligt står så galt til som man kan frygte.
Raj Rajaratnam smed iøvrigt lige 100mio USD på bordet i kaution for at blive løsladt...."fair nok" sum lige at hive op af lommen til den slags formål.
Lidt fra Cramer om sagen
http://www.cnbc.com/id/33382679
Og her selve anklageskriftet (vil jeg tro...uden at være kgl. edsvoren translatør i juridisk engelsk)
http://sec.gov/litigation/complaints/2009/comp21255.pdf
Fra side 10 og frem begynder detaljerne. Efter blot at have læst et par sider kan der næppe herske tvivl om at det er dybt kriminelt, det der har foregået....selvom man er uskyldig til det modsatte er bevist.
Se bl.a. Google-sagen på side 14 og frem, som gav over 9mio usd i kassen.
Der er det en medarbejder i et PR-bureau som har adgang til info om Google's earnings 9dage før de bliver frigivet...!!!
Så kan man så begynde at forestille sig hvor mange der ellers har haft adgang til den info..... og så gange op med antallet af børsnoterede virksomheder i USA... osv, osv osv osv. Der må være SÅ mange mennesker og hedge funds som laver kassen ulovligt på insiderviden. Alt andet vil simpelthen ikke give mening i et råt kapitalistisk samfund. Jeg begynder lidt at overveje om man som lille privat investor overhovedet kan overkomme den "edge" som en stor del (?) af markedet har, hvis det vitterligt står så galt til som man kan frygte.
Raj Rajaratnam smed iøvrigt lige 100mio USD på bordet i kaution for at blive løsladt...."fair nok" sum lige at hive op af lommen til den slags formål.
22/10 2009 09:06 collersteen 320785 Igen lidt fra Wall Street Journal.
Nu ser hovedkilden ud til at være identificeret
http://online.wsj.com/article/SB125613042653698825.html?mod=rss_whats_news_us_business
Nu ser hovedkilden ud til at være identificeret
http://online.wsj.com/article/SB125613042653698825.html?mod=rss_whats_news_us_business
31/10 2009 10:35 collersteen 321172 Det var sgu også på tide.
The Securities and Exchange Commission filed a civil suit against a former top executive of an activist San Francisco hedge fund and six others charging them with insider trading. The SEC alleges they made more than $8 million trading on stocks based partly on information the executive learned on the job.
The executive, Ronald Yee, was the chief financial officer of ValueAct Capital, a firm known for taking big stakes in companies and becoming involved in their management, the firm said. ValueAct is run by former Fidelity Investments fund manager Jeffrey Ubben, who is best known for being the second-biggest shareholder and becoming chairman of Martha Stewart Living Omnimedia Inc. after the company's namesake founder was indicted on charges related to insider trading. Neither Mr. Ubben nor ValueAct is implicated in the case.
In the lawsuit, the SEC accused Mr. Yee of giving inside information to his brother-in-law Chen Tang and some other defendants. Six of the seven defendants are accused of using the information to trade shares of either technology company Acxiom Corp. or foam-mattress maker Tempur-Pedic International Inc. Neither company is implicated.
The government complaint portrays Mr. Tang as the central figure in the case, allegedly receiving and passing information to the other participants. Mr. Yee wasn't accused of trading on the inside information.
http://online.wsj.com/article/SB125694443678619799.html
The Securities and Exchange Commission filed a civil suit against a former top executive of an activist San Francisco hedge fund and six others charging them with insider trading. The SEC alleges they made more than $8 million trading on stocks based partly on information the executive learned on the job.
The executive, Ronald Yee, was the chief financial officer of ValueAct Capital, a firm known for taking big stakes in companies and becoming involved in their management, the firm said. ValueAct is run by former Fidelity Investments fund manager Jeffrey Ubben, who is best known for being the second-biggest shareholder and becoming chairman of Martha Stewart Living Omnimedia Inc. after the company's namesake founder was indicted on charges related to insider trading. Neither Mr. Ubben nor ValueAct is implicated in the case.
In the lawsuit, the SEC accused Mr. Yee of giving inside information to his brother-in-law Chen Tang and some other defendants. Six of the seven defendants are accused of using the information to trade shares of either technology company Acxiom Corp. or foam-mattress maker Tempur-Pedic International Inc. Neither company is implicated.
The government complaint portrays Mr. Tang as the central figure in the case, allegedly receiving and passing information to the other participants. Mr. Yee wasn't accused of trading on the inside information.
http://online.wsj.com/article/SB125694443678619799.html
1/11 2009 13:27 collersteen 221217 Så er der her lidt om Madoff og SEC's manglende evne til at afsløre ham efter flere tips over en lang årrække.
Bl.a. lidt fra 2006, hvor han over blev tjekket over en periode på 2mdr.... uden at blive afsløret.
Der er lidt links i artiklen også til div. dokumenter fra sagen, interviews m.m.
http://online.wsj.com/article/SB125694046635819511.html
Som altid med WSJ-artikler kan man - såfremt man ikke er abonnent og artiklen kræver log on - søge på artikeloverskriften på google og som regel ad den vej få adgang til hele artiklen.
Bl.a. lidt fra 2006, hvor han over blev tjekket over en periode på 2mdr.... uden at blive afsløret.
Der er lidt links i artiklen også til div. dokumenter fra sagen, interviews m.m.
http://online.wsj.com/article/SB125694046635819511.html
Som altid med WSJ-artikler kan man - såfremt man ikke er abonnent og artiklen kræver log on - søge på artikeloverskriften på google og som regel ad den vej få adgang til hele artiklen.
5/11 2009 20:47 collersteen 221413 Og mere endnu. Det er sandelig også på tide. Det kan kun være toppen af toppen af toppen af isbjerget der nu dukker frem..... men hvorfor kommer dette altid først op til overfladen når festen er slut og alle er gået hjem?
http://www.marketwatch.com/story/us-charges-14-with-insider-trading-2009-11-05
Nu er det bl.a. også advokater der bliver inddraget.
Som jeg har skrevet før må der være så ufatteligt meget ulovlig handel rundt omkring..... Det er helt absurd at tænke på hvor mange advokater, revisorer, bankfolk, rådgivere af den ene, anden og tredje slags der hver eneste dag for enormt følsom insiderviden.... Det vil også være helt naivt at tro at ikke en stor del vil være stærkt fristet af at score en gevinst på denne "victim less crime" (som de kalder det)...
http://www.marketwatch.com/story/us-charges-14-with-insider-trading-2009-11-05
Nu er det bl.a. også advokater der bliver inddraget.
Som jeg har skrevet før må der være så ufatteligt meget ulovlig handel rundt omkring..... Det er helt absurd at tænke på hvor mange advokater, revisorer, bankfolk, rådgivere af den ene, anden og tredje slags der hver eneste dag for enormt følsom insiderviden.... Det vil også være helt naivt at tro at ikke en stor del vil være stærkt fristet af at score en gevinst på denne "victim less crime" (som de kalder det)...
Og da vi jo herhjemme, har sat et par får til at vogte ulvene, må vi lade os nøje med underholdningen fra den anden side af dammen 
Og nej- jeg tænker i denne forbindelse slet ikke på den danske Market Maker ordning.....
Og nej- jeg tænker i denne forbindelse slet ikke på den danske Market Maker ordning.....
29/12 2009 20:20 collersteen 023867 Det er åbenbart Galleon-uge i WSJ, så her er en ret lang og spændende artikel om starten af hans (Raj Rajaratnam) karriere. Man kan så undre sig over at han ikke er blevet stoppet før, men det beviser jo nok ikke andet end at hele wall street er gennemkorrumperet og at det vil tage mange år at få ryddet helt op. Samtidig kan man overveje, hvor mange der i årenes løb er gået fri.... og stadig går fri. Vi private er allerede langt bagud inden vi bare så meget som tænker over at gå i markedet. Utroligt, at vi egentlig gør det, nu man tænker over det....
Jeg ser frem til morgendagens artikel.
http://online.wsj.com/article/SB126204917965408363.html?mod=WSJ_hp_mostpop_read
Jeg ser frem til morgendagens artikel.
http://online.wsj.com/article/SB126204917965408363.html?mod=WSJ_hp_mostpop_read
