Frank A. Rubino, ESQ.

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Galleon Group Insider Trading Charges Continue

Another hedge fund manager with ties to the Galleon Group has been charged for illegally profiting from inside information. The white collar criminal charges carry a potential prison sentence of 25 years. Allegedly, the man was given earnings information and other confidential business knowledge concerning Google and Polycom. He is accused of using that information in stock trades from 2006 to 2009. He is also accused of passing along insider information concerning Marvell Technology Group Ltd. The person who provided him with the insider knowledge has connections to Raj Rajaratnam who was convicted last May in a case that drew national headlines.

The specific charges facing the California man are for securities fraud and conspiracy to commit securities fraud. The charges concern some $900,000 in profits based on the trading of the three technology stocks. In addition to the criminal charges, the man is facing a civil case filed by the Securities and Exchange Commission. An attorney for the hedge fund manager has stated that no money or personal benefit was given to anyone in exchange for inside information. The man had pleaded not guilty and has been released on bond.

Federal officials reiterated their dedication to pursuing everyone connected to the Galleon Group insider trading scandal. They have cast a wide net and investigated countless associates and others with any connection to the company. At this point, past acquaintances are likely afraid of a "guilt by association" finding. Prominent investors and traders almost always know the other players in their field. If simple networking is enough to draw the attention of FBI investigators, almost no one in the industry is safe.

Source: Reuters, "Hedge fund manager charged with insider trading," by Grant McCool, 10 February 2012

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