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 The perp walk is back! One of the richest men in the U.S., along with five others, was arrested Friday and charged with insider trading. Galleon Group founder Raj Rajaratnam and his cohorts allegedly made $20 million by trading on information in the stocks of several companies including Advanced Micro Devices Inc. (NYSE:AMD), Clearwire Corp. (NASDAQ: CLWR) and Akamai Technologies Inc. (NASDAQ: AKAM). Federal prosecutors for the Southern District of New York accused Rajaratnam with illegally obtaining and trading on information on these companies, and on information pertaining to Polycom Inc. (NASDAQ:PlCM), Hilton Hotels, Google Inc. (NASDAQ:GOOG) and People Support. He was charged with four counts of conspiracy and nine counts of securities fraud. U.S. Attorney Preet Bharara said, "This is not a garden variety insider trading case. This case represents the largest hedge fund insider trading case ever charged criminally." The prosecutors' case is built on getting two cooperating witnesses who have agreed to plead guilty to work with them and from the recording of four conversations between the witnesses and Rajaratnam. The unnamed witness began conversations with the Federal Bureau of Investigation in 2007, which led to the wire taps. Bharara also said he believed it was the first time that prosecutors had used a wiretap in an insider trading case. Using techniques typically used against organized crime should scare the pants off Wall Street -- who might be next? Rajaratnam must have had a sneaky suspicion that something was amiss, and according to court documents, he had expressed to another individual that he believed a former Galleon Group employee was wearing a wire. He then purchased a plane ticket to fly to London on Friday from New York's JFK Airport, but the Feds stepped in. Others charged criminally in the case include Rajiv Goel, director in strategic investments at Intel Corp.'s (NASDAQ: INTC) investment arm; Anil Kumar, a director at global management consulting firm McKinsey & Co.; Danielle Chiesi and Mark Kurland of New Castle Partners LLC, the one-time equity hedge fund group at Bear Stearns Asset Management Inc.; and Robert Moffat, a senior vice president at IBM Corp. (NYSE: IBM). The Securities and Exchange Commission separately brought civil insider trading charges against Rajaratnam and his company. The SEC also brought charges against the five other individuals who had been charged criminally and New Castle. The regulator, in its civil case, claims the scheme netted more than $25 million in illicit gains. Rajaratnam was expected to appear in federal court in Manhattan Friday. In a statement, Galleon Group said: Galleon was shocked to learn today that Raj Rajaratnam was arrested this morning at his apartment. We had no knowledge of the investigation before it was made public and we intend to cooperate fully with the relevant authorities. Galleon continues to operate and is highly liquid. - Donna Block
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