When federal authorities came to arrest Anil Kumar, 51, a partner at the global consulting firm McKinsey & Co., for alleged insider trading with Raj Rajaratnam, the founder of Galleon Management, it is reported he fainted at the door and had to be hospitalized.
Kumar's colleagues at McKinsey are shocked as are Silicon Valley friends, who know him as a careful and smart man who never discussed inside information. In fact, Kumar was so trusted, McKinsey sent him to India back in 1998 to set up its India Knowledge Center, a data backbone for Wall Street investors, the Financial Times reports.
To friends and colleagues, Kumar and Rajiv Goel, one of the directors at Intel Capital who is also accused of insider trading, were generous and philanthropic.
The Securities and Exchange Commission has charged Rajaratnam, Kumar and Goel of insider trading along with Robert Moffat, senior vice president and group executive at IBM; Danielle Chiesi, an employee of New Castle Funds LLC, formerly the equity hedge fund group of Bear Stearns Asset Management, Inc.; and Mark Kurland, a top executive at New Castle.
Rajaratnam, 52, of Sri Lankan origin, and founder of the New York-based hedge fund advisory firm Galleon Management LP , is considered the main accused and is charged with engaging in a "massive insider-trading scheme that generated more than $25 million in illicit gains," according to the U.S. Attorney's Office for the Southern District of New York.
Kumar is accused of passing inside information to Rajaratnam about Advanced Micro Devices, a McKinsey client. The U.S. Attorney's Office says Kumar obtained inside information about pending transactions involving Advance and two Abu Dhabi-based sovereign entities, which he shared with Rajaratnam, who then traded on behalf of Galleon. Galleon was managing $3.7 billion in assets at the time the prosecutors made their arrests in New York and California.
Goel, 51, a director in strategic investments at Intel Capital, the investment arm of Intel Corporation, is charged with engaging in insider trading involving Clearwire stock between March and October 2008. He is said to have obtained and supplied information to Rajaratnam regarding investments in Clearwire made by Intel in spring 2008. Rajaratnam activated Galleon trades based on this information, making a hefty $579,000, according to Preet Bharara, U.S. attorney for the Southern District of New York. In exchange for the information, Rajaratnam placed profitable trades for Goel in a personal brokerage account maintained by Goel at Charles Schwab, authorities say, and altogether Goel made some $250,000. Some entrepreneurs and investors call that chumpchange for the likes of Goel and Kumar. But Bharara, who announced the charges on Oct. 16, called it "the largest hedge fund insider trading case in history," involving some $20 million in profits illegally made. "This is not a garden variety insider-trading case," Bharara said. "This case represents the largest hedge fund insider-trading case ever charged criminally."
Kumar, Goel and Rajaratnam, all graduates of the prestigious Wharton Business School of the University of Pennsylvania, have denied the charges. The irony of this case is not lost on South Asians and Indians. On both sides of the law, the defendants and one of the main prosecutors are of Indian descent, a sign, in some ways, that the community has come of age. Galleon has announced it is shutting down its hedge funds following massive withdrawals as the scandal was announced.
Some Wall Street analysts believe the line between a "tip" and insider information is fine. A Wall Street Journal report calls insider trading "one of the most confounding crimes to understand" seeing that fine line between information that is legally or illegally shared or procured.
According to The New York Times, proving insider trading is
When federal authorities came to arrest Anil Kumar, 51, a partner at the global consulting firm McKinsey & Co., for alleged insider trading with Raj Rajaratnam, the founder of Galleon Management, it is reported he fainted at the door and had to be hospitalized.
Kumar's colleagues at McKinsey are shocked as are Silicon Valley friends, who know him as a careful and smart man who never discussed inside information. In fact, Kumar was so trusted, McKinsey sent him to India back in 1998 to set up its India Knowledge Center, a data backbone for Wall Street investors, the Financial Times reports.
To friends and colleagues, Kumar and Rajiv Goel, one of the directors at Intel Capital who is also accused of insider trading, were generous and philanthropic.
The Securities and Exchange Commission has charged Rajaratnam, Kumar and Goel of insider trading along with Robert Moffat, senior vice president and group executive at IBM; Danielle Chiesi, an employee of New Castle Funds LLC, formerly the equity hedge fund group of Bear Stearns Asset Management, Inc.; and Mark Kurland, a top executive at New Castle.
Rajaratnam, 52, of Sri Lankan origin, and founder of the New York-based hedge fund advisory firm Galleon Management LP , is considered the main accused and is charged with engaging in a "massive insider-trading scheme that generated more than $25 million in illicit gains," according to the U.S. Attorney's Office for the Southern District of New York.
Kumar is accused of passing inside information to Rajaratnam about Advanced Micro Devices, a McKinsey client. The U.S. Attorney's Office says Kumar obtained inside information about pending transactions involving Advance and two Abu Dhabi-based sovereign entities, which he shared with Rajaratnam, who then traded on behalf of Galleon. Galleon was managing $3.7 billion in assets at the time the prosecutors made their arrests in New York and California.
Goel, 51, a director in strategic investments at Intel Capital, the investment arm of Intel Corporation, is charged with engaging in insider trading involving Clearwire stock between March and October 2008. He is said to have obtained and supplied information to Rajaratnam regarding investments in Clearwire made by Intel in spring 2008. Rajaratnam activated Galleon trades based on this information, making a hefty $579,000, according to Preet Bharara, U.S. attorney for the Southern District of New York. In exchange for the information, Rajaratnam placed profitable trades for Goel in a personal brokerage account maintained by Goel at Charles Schwab, authorities say, and altogether Goel made some $250,000. Some entrepreneurs and investors call that chumpchange for the likes of Goel and Kumar. But Bharara, who announced the charges on Oct. 16, called it "the largest hedge fund insider trading case in history," involving some $20 million in profits illegally made. "This is not a garden variety insider-trading case," Bharara said. "This case represents the largest hedge fund insider-trading case ever charged criminally."
Kumar, Goel and Rajaratnam, all graduates of the prestigious Wharton Business School of the University of Pennsylvania, have denied the charges. The irony of this case is not lost on South Asians and Indians. On both sides of the law, the defendants and one of the main prosecutors are of Indian descent, a sign, in some ways, that the community has come of age. Galleon has announced it is shutting down its hedge funds following massive withdrawals as the scandal was announced.
Some Wall Street analysts believe the line between a "tip" and insider information is fine. A Wall Street Journal report calls insider trading "one of the most confounding crimes to understand" seeing that fine line between information that is legally or illegally shared or procured.
According to The New York Times, proving insider trading is