Billionaire hedge fund founder Raj Rajaratnam and executives from some of the most prestigious US companies were charged on Friday with the largest hedge fund insider-trading scheme ever.
Investigators said they used court-approved telephone wiretaps for the first time in a Wall Street insider trading case, sending shivers through the hedge fund industry which has traditionally picked up and shared trading tips to make big profits.
At the center of the case are Rajaratnam, his Galleon hedge fund and two executives from hedge fund New Castle, which was a unit of Bear Stearns Asset Management before Bears Stearns Cos collapsed last year, but is still in operation.
Three executives from major US companies IBM Corp, top consulting firm McKinsey & Co and the venture capital arm of chip giant Intel Corp are also facing criminal charges.
“This is not a garden-variety insider trading case,” Preet Bharara, the US Attorney for Manhattan, said at a news conference.
He said the scheme made more than US$20 million in illegal profits over several years.
One of the criminal complaints accuses Rajaratnam, 52, considered the richest Sri Lankan in the world, of conspiring with Intel Capital treasury department managing director Rajiv Goel and Anil Kumar, a director of McKinsey & Co. The alleged offenses took place over three years starting in January 2006.
Galleon had as much as US$7 billion under management, the complaint said.
Early on Friday evening, a US magistrate judge in New York said Rajaratnam could be released on a US$100 million personal recognizance bond secured by US$20 million in cash and property.
In a brief appearance, Rajaratnam sat in court with his arms folded. The judge restricted his travel to a radius of 177km from Manhattan and Rajaratnam, a citizen of both Sri Lanka and the US, surrendered travel documents.
A prosecutor argued that Rajaratnam was a flight risk, but his lawyer Jim Walden said: “A court’s going to learn there’s a lot more to this case. There is no way that this man is going to flee.”
A second criminal complaint accused three other people — New Castle portfolio manager Danielle Chiesi, New Castle general partner Mark Kurland and Robert Moffat, a senior vice president in the IBM technology group — of insider trading crimes and earning millions of dollars in illegal profits.
“It shows that we are targeting white-collar insider trading rings with the same powerful investigative techniques that have worked so successfully against the mob and drug cartels,” Bharara said.
All six were charged with securities fraud and conspiracy in two criminal complaints filed in US District Court in Manhattan. Kumar was permitted to be released on a US$5 million bond, Kurland on a US$3 million bond, and Moffat and Chiesi on a US$2 million bond. In California, Goel posted US$300,000 cash for bail.
The six were also charged in a separate civil complaint by the US Securities and Exchange Commission (SEC). The SEC said the accused traded on insider information from 10 companies.
The companies included Hilton Hotels Corp, Google Inc, IBM, Advanced Micro Devices Inc and several other companies.
The prosecutor also fired a warning shot for the rest of Wall Street.
“Today, tomorrow, next week, the week after, privileged Wall Street insiders who are considering breaking the law will have to ask themselves one important question: Is law enforcement listening?” he said.
Securities fraud charges carry possible maximum prison sentences of up to 20 years.
EUROPEAN TARGETS: The planned Munich center would support TSMC’s European customers to design high-performance, energy-efficient chips, an executive said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday said that it plans to launch a new research-and-development (R&D) center in Munich, Germany, next quarter to assist customers with chip design. TSMC Europe president Paul de Bot made the announcement during a technology symposium in Amsterdam on Tuesday, the chipmaker said. The new Munich center would be the firm’s first chip designing center in Europe, it said. The chipmaker has set up a major R&D center at its base of operations in Hsinchu and plans to create a new one in the US to provide services for major US customers,
The Ministry of Transportation and Communications yesterday said that it would redesign the written portion of the driver’s license exam to make it more rigorous. “We hope that the exam can assess drivers’ understanding of traffic rules, particularly those who take the driver’s license test for the first time. In the past, drivers only needed to cram a book of test questions to pass the written exam,” Minister of Transportation and Communications Chen Shih-kai (陳世凱) told a news conference at the Taoyuan Motor Vehicle Office. “In the future, they would not be able to pass the test unless they study traffic regulations
GAINING STEAM: The scheme initially failed to gather much attention, with only 188 cards issued in its first year, but gained popularity amid the COVID-19 pandemic Applications for the Employment Gold Card have increased in the past few years, with the card having been issued to a total of 13,191 people from 101 countries since its introduction in 2018, the National Development Council (NDC) said yesterday. Those who have received the card have included celebrities, such as former NBA star Dwight Howard and Australian-South Korean cheerleader Dahye Lee, the NDC said. The four-in-one Employment Gold Card combines a work permit, resident visa, Alien Resident Certificate (ARC) and re-entry permit. It was first introduced in February 2018 through the Act Governing Recruitment and Employment of Foreign Professionals (外國專業人才延攬及雇用法),
‘A SURVIVAL QUESTION’: US officials have been urging the opposition KMT and TPP not to block defense spending, especially the special defense budget, an official said The US plans to ramp up weapons sales to Taiwan to a level exceeding US President Donald Trump’s first term as part of an effort to deter China as it intensifies military pressure on the nation, two US officials said on condition of anonymity. If US arms sales do accelerate, it could ease worries about the extent of Trump’s commitment to Taiwan. It would also add new friction to the tense US-China relationship. The officials said they expect US approvals for weapons sales to Taiwan over the next four years to surpass those in Trump’s first term, with one of them saying
RSS