Two Indian Americans among six arrested for insider-trading

Two Indian Americans among six arrested for insider-trading

Besides Tamil-origin Raj Rajaratnam, the founder of Galleon Group, the two Indian Americans identified as Anil Kumar and Rajiv Goel (both 51) were arrested on Friday, said Preet Bharara, the US Attorney for the Southern District of New York. While Rajaratnam is a resident of New York, Kumar and Goel live in California. The other three involved in this case are Danielle Chiesi (43) from New York, Robert Moffat (53) from Connecticut and Mark Kurland (60) from New York.

If convicted all of them face imprisonment of up to 20 years, according to the indictment, which reads that the defendants "routinely received inside information directly or indirectly from insiders and provided it to each other for the purpose of trading based on the information", filed in the US court.

Noting that this should be a wakeup call for the Wall Street, Bharara -– an Indian American recently appointed to this powerful post by US President Barack Obama -- termed it as a decisive action against fraud on the Wall Street. Meanwhile, the Wall Street Journal reported that Rajaratnam was among several wealthy Sri Lankans in US whose donations to a Maryland-based charity made their way to the Tamil Tigers.

Rajaratnam's attorney Jim Walden said his client was innocent and will fight the insider-trading charges, the Journal said. He also said that the Tamil-origin billionaire had made charitable donations "to rebuild homes" destroyed by the devastating tsunami in Sri Lanka and other Indian Ocean nations in 2004, but had no links to LTTE, it said
Rajaratnam, Kurland, Chiesi, and others repeatedly traded on material, non-public information given as tips by insiders and others at hedge funds, public companies, and investor relations firms -- including Intel, IBM, McKinsey, Moody's Investors Services Inc., Market Street Partners, Akamai Technologies, Inc. and Polycom Inc.

As a result of their insider trading, Rajaratnam, Chiesi, Kurland and others earned millions of dollars of illegal profits for themselves and the hedge funds with which they were affiliated. One of the insiders, Kumar, profited from investments in Galleon. Goel, also an insider, received profitable trades in a personal account managed by Rajaratnam, the complaints said.

Telephone conversations between Rajaratnam and Chiesi, revealed that Rajaratnam, Kurland, Chiesi and the CW routinely received inside information directly or indirectly from insiders and provided it to each other. Galleon Group is a hedge fund with up to USD 7 billion in assets under management. Out of the USD 20 million, Rajaratnam alone made USD 12.7 million in illegal profits for Galleon.