Raj Rajaratnam Founder of Galleon Group Arrested With Insider Trading (Photos)

Galleon Group founder Raj Rajaratnam Photos! On Friday October 16th, 2009, Raj Rajaratnam (founder of Galleon Group) was arrested by the FBI and accused of conspiring with others to trade based on insider information about several publicly traded companies, including Google Inc. U.S. Attorney Preet Bharara, putting total profits in the scheme at $20.6 million, told a news conference it was the largest hedge fund case ever prosecuted and marked the first use of court-authorized wiretaps to capture conversations by suspects in an insider trading case.

According to a criminal complaint filed in U.S. District Court in Manhattan, Rajaratnam obtained insider information and then caused the Galleon Technology Funds to execute trades that earned a profit of more than $12.7 million between January 2006 and July 2007. Other schemes garnered millions more, authorities say.

Bharara said, “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 successfully against the mob and drug cartels.”

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,” he said.

Hedge funds are open only to institutions and wealthy individuals and employ a wider range of trading activities than other investment funds.

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