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Raj Rajaratnam charged with insider trading
  Hedgeweb - MON, OCT 19 2009
Funds & Investment Billionaire investor Raj Rajaratnam and present and former executives of Bear Stearns, IBM, Intel and McKinsey were charged yesterday in an alleged insider trading scheme that US prosecutors called the biggest ever involving hedge funds.

Mr Bharara, US attorney in Manhattan, said the investigation, aided by an unnamed co-operating witness, was continuing. He said the charges "should be a wake-up call for every hedge fund manager and every Wall Street trader and every corporate executive who is even thinking about engaging in insider trading".

Prosecutors claimed Mr Rajaratnam, founder of the Galleon hedge fund, and others used insider information from sources inside hedge funds, public companies, Moody's Investors Service and an investor relations firm to trade ahead of earnings announcements, acquisitions and joint venture deals.

The alleged scheme, which ran from 2006 until earlier this year, involved trades in companies including Google, IBM, Sun Microsystems and Hilton and produced profits of more than $20m, most of which went to Mr Rajaratnam, according to federal prosecutors. The Securities and Exchange Commission, which brought civil charges, put the proceeds of the scheme at more than $25m.

Among those charged with trading on and providing tips were Mr Rajaratnam; Danielle Chiesi, an employee of New Castle, a hedge fund set up by Bear; and Mark Kurland, a New Castle executive who formerly served as Bear's head of research and asset management.

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