March 4 (Bloomberg) -- Raj Rajaratnam, co-founder of the Galleon Group LLC hedge fund, is at the center of the largest U.S. crackdown on hedge-fund insider trading in U.S. history. His trial begins March 8 in federal court in Manhattan, where his friends and former associates may testify against him.
The case is U.S. v. Rajaratnam, 09-cr-1184, U.S. District Court, Southern District of New York (Manhattan).
Those involved in the case include:
Raj Rajaratnam: The Sri Lankan-born billionaire is accused of making $45 million through illegal trading and conspiring with others to obtain inside information on companies including Google Inc., Intel Corp. and EBay Inc. Rajaratnam, who was arrested on Oct. 16, 2009, schemed with several people who later pleaded guilty, including Roomy Khan, Rajiv Goel, Anil Kumar and Danielle Chiesi, prosecutors said. He faces five counts of conspiracy and nine counts of securities fraud. If convicted, he could spend as long as 20 years in prison on the fraud charges. Rajaratnam, 53, denies wrongdoing.
Danielle Chiesi: The former New Castle Funds LLC consultant admitted to getting tips from insiders at public companies. Chiesi, 45, who was arrested with Rajaratnam, pleaded guilty on Jan. 19 to three counts of conspiracy to commit securities fraud and faces 37 to 46 months in prison under advisory sentencing guidelines. She’s not cooperating with prosecutors against Rajaratnam. Robert Moffat, a former International Business Machines Corp. executive who pleaded guilty to securities fraud and conspiracy, said he and Chiesi had an “intimate relationship” and claimed she “played him” to obtain inside information. She lives in New York.
Rajat K. Gupta: A former Goldman Sachs Group Inc. director, Gupta was accused on March 1 by the U.S. Securities and Exchange Commission’s enforcement division of tipping Rajaratnam about Berkshire Hathaway Inc.’s $5 billion investment in Goldman Sachs, the firm’s quarterly earnings, and earnings at Procter & Gamble Co. Rajaratnam’s attorney John M. Dowd said he may call Gupta as a trial witness. Gupta’s attorney Gary Naftalis has called the SEC’s allegations “baseless.” From 1994 to 2003, Gupta ran McKinsey & Co., the global consulting firm.
Roomy Khan: A former employee of Intel and Galleon, Khan pleaded guilty to insider-trading charges on Oct. 19, 2009, three days after Rajaratnam’s arrest. She also pleaded guilty in 2001 to leaking stock tips to Galleon and was sentenced to probation. She began helping prosecutors build a case against Rajaratnam in 2007. Khan implicated Rajaratnam in that case, although he was not charged, said prosecutors in San Jose, California. She lives in Fort Lauderdale, Florida.
Anil Kumar: A former McKinsey & Co. director, Kumar pleaded guilty on Jan. 7, 2010, to leaking inside information to Rajaratnam over five years in return for $1.75 million. He agreed to testify against Rajaratnam in a bid for leniency at sentencing. Kumar admitted to passing tips to Rajaratnam from 2004 to 2009, including one about Advanced Micro Devices Inc.’s acquisition of ATI Technologies Inc. in 2006.
Rajiv Goel: A former managing director in Intel’s treasury group, Goel pleaded guilty on Feb. 8, 2010, to conspiracy and securities fraud charges. Goel, who is cooperating with prosecutors, implicated Rajaratnam in his guilty plea and said he had known him for 25 years. Goel leaked news about Clearwire Corp. that he learned from investments made by Intel, and Rajaratnam made about $579,000 in profit. In return, Rajaratnam placed profitable trades for Goel’s benefit in Goel’s personal brokerage account at Charles Schwab Corp., prosecutors said.
Richard Choo-Beng Lee: A co-founder of Spherix Capital LLC, Lee pleaded guilty to conspiracy and securities fraud on Oct. 13, 2009, and is cooperating with prosecutors. Lee admitted that from 2007 to March 2009, he got inside information from people at publicly traded corporations and shared it with other hedge-fund managers. His sources included people in Asia at technology companies, according to his criminal charges. His employers included SAC Capital Advisors LLC, the hedge-fund firm run by Steven Cohen, where he was an analyst from 1999 to 2004, and Stratix Asset Management LLC, a now-closed New York hedge fund that he joined when it was started by two former SAC Capital traders.
Ali Far: Another co-founder of Spherix Capital, Far pleaded guilty on Oct. 19, 2009, and is cooperating with prosecutors. He admitted that from 2003 to 2009, he traded on inside information about technology companies, including Atheros Communications Inc., making a profit of more than $5 million in Spherix accounts. Far told the judge that payments to the tippers were made through his hedge fund’s prime brokers. Far worked from 1999 to 2007 as an analyst and portfolio manager at Galleon. He lives in San Jose.
Robert Moffat: Moffat, a former executive with IBM, pleaded guilty to conspiracy and securities fraud and admitted that he leaked inside information about IBM and Lenovo Group Ltd. to Danielle Chiesi. He was sentenced to six months in prison and is scheduled to be released in May. Moffat, a resident of Ridgefield, Connecticut, has been serving his time at the Metropolitan Detention Center in Brooklyn, New York.
Mark Kurland: Kurland is a co-founder of New Castle Funds and was Chiesi’s boss. He was sentenced to 27 months in prison in May after pleading guilty to charges that he used inside information to trade in Advanced Micro, Akamai Technologies and Sun Microsystems Inc. Kurland, who lives in Mount Kisco, New York, is serving his sentence at the Federal Correctional Institution in Otisville, New York. He is due to be released in July 2012.
Steven Fortuna: A former managing director at S2 Capital Management LP in Boston, Fortuna pleaded guilty on Nov. 5, 2009, to conspiracy and securities fraud charges. Fortuna admitted trading on inside information on Akamai Technologies Inc., the largest supplier of software and services to make websites load faster, and chipmaker Advanced Micro Devices Inc. Fortuna worked at Stratix for about a year and a half in 2006 and 2007, according to data compiled by Bloomberg. Fortuna, who lives in Westwood, Massachusetts, is cooperating with prosecutors.
Ali Hariri: A former Atheros Communications Inc. vice president, Hariri was sentenced to 18 months in prison and fined $50,000 for leaking information on the company’s forecast cut for the fourth quarter of 2008. After getting the tip, Ali Far bet Atheros’s stock would fall, using a short sale, prosecutors said. Hariri pleaded guilty on March 3, 2010, and was sentenced on Nov. 8. Hariri, who didn’t cooperate with prosecutors, is serving his term at Metropolitan Correctional Center in San Diego.
Deep Shah: A former analyst at Moody’s Investors Service, Shah was criminally charged on Nov. 4, 2009, with tipping Khan about the takeover of Hilton Hotels Corp. by Blackstone Group LP. Khan traded on that information and tipped Rajaratnam, who traded on behalf of Galleon, according to the SEC. He remains at large.
Shammara Hussain: Hussain worked in 2007 at Market Street Partners, an investor-relations consulting firm that did work for Google. Hussain was sued by the SEC on Jan. 10 and hasn’t been criminally charged with wrongdoing. The SEC said Hussain tipped Khan about Google’s earnings. She lives in Fremont, California.
Jeffrey Yokuty: Yokuty worked as an analyst at Trivium Capital Management LLC, where he reported to Robert Feinblatt. He was sued by the SEC on Jan. 10 and hasn’t been criminally charged with wrongdoing. The SEC said he received inside tips about Polycom Inc., a maker of videoconferencing equipment, and other companies from Roomy Khan. He lives in New York.
Robert Feinblatt: Feinblatt is co-founder and was a principal at Trivium Capital Management LLC. He was sued by the SEC on Jan. 10 and hasn’t been criminally charged with wrongdoing. The SEC said he received inside tips about Polycom and other companies from Roomy Khan. He lives in New York.
Sunil Bhalla: Bhalla joined Polycom Inc. in 2000 and was a senior vice president and general manager of the company’s voice division. Bhalla, who lives in Fremont, was sued by the SEC on Jan. 10 and hasn’t been criminally charged with wrongdoing. The SEC said Bhalla tipped Roomy Khan about Polycom’s earnings.
Thomas Hardin: Hardin was a managing director at Lanexa Management LLC, previously known as Camber Global Management, until February 2009. Hardin pleaded guilty to insider trading charges in December 2010 and is cooperating with prosecutors. Hardin got inside tips from Roomy Khan and traded on Hilton Worldwide Inc., Google and Kronos Inc., authorities said. He hasn’t yet been sentenced. He is a 1999 graduate of the Wharton School of the University of Pennsylvania and lives in Westwood, New Jersey.
Michael Cardillo: Cardillo is a former Galleon trader and portfolio manager who pleaded guilty to insider trading charges and is cooperating with prosecutors. He worked at Galleon from 2003 to 2009. He admitted trading on illegal tips about Axcan Pharma Inc. and said in court that he schemed with Rajaratnam and others to trade illegally in Hilton Hotels, Procter & Gamble Co., JM Smucker Co. and other companies. He lives in New York.
Adam Smith: Smith is a former Galleon portfolio manager who pleaded guilty to insider trading charges and is cooperating with prosecutors. He worked at Galleon from 2002 to 2009. He admitted trading on tips about Integrated Device Technology Inc.’s acquisition of Integrated Circuit Systems Inc. in 2005 and Advanced Micro’s acquisition of ATI Technologies in 2006. Smith, a 1999 graduate of Harvard Business School, lives in New York.
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