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Billionaire Hedge Fund Manager Charged in Insider Trading Scheme

The SEC charged a billionaire hedge fund manager in an insider trading scheme that also allegedly involved senior executives at IBM, Intel, McKinsey & Co. and New Castle Funds. The SEC said it is the largest hedge fund insider trading case ever filed.

The SEC complaint, filed in federal district court in Manhattan Oct. 16, charges that Raj Rajaratnam and his New York-based hedge fund Galleon Management engaged in a massive insider trading scheme that generated more than $25 million.

Rajaratnam tapped into his network of friends and business associates to obtain confidential information about corporate earnings or takeover plans at companies including Google, Hilton and Sun Microsystems, the SEC alleges.

"[T]he secret of [Rajaratnam's] success is not genius trading strategies," Robert Khuzami, director of the SEC's Division of Enforcement, said in a statement. "Raj Rajaratnam is not a master of the universe, but rather a master of the Rolodex."

Also charged in the scheme were:

  • Rajiv Goel, a managing director at Intel Capital, an Intel subsidiary
  • Anil Kumar, a director at McKinsey & Co.
  • Robert Moffat, a senior vice president at IBM
  • Danielle Chiesi, a portfolio manager at New Castle Funds
  • Mark Kurland, a senior managing director at New Castle Funds

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