Why would hedge fund manager Raj Rajaratnam risk his $1.5 billion fortune for $20 million in illegal gains? said Peter Cohan in DailyFinance. He probably didn’t; it’s more likely that Rajaratnam—arrested for insider trading—and his $3.7 billion fund, Galleon, earned most of their 20 percent annual returns through cheating, with the help of Rajaratnam’s co-defendants from Intel, IBM, McKinsey, and New Castle Partners.
What’s notable about this case, said Gwen Robinson in the Financial Times, is the government’s “unprecedented—and extensive—use of wiretaps and other gum-shoe methods,” as if investors were “mobsters.” Embarrassed by the Bernie Madoff fraud, securities investigators are pulling out all the stops to show “they mean business.”
“Treating hedge funds like the mafia” will “play well politically,” said The Wall Street Journal in an editorial, but it doesn’t mean justice will be served. Especially with “the public’s anti–Wall Street mood” so strong, we’ll “reserve judgment” about the insider-trading charges until prosecutors “prove it in court.” After all, “information is the lifeblood of professional stock trading,” and the kind most traders share is “entirely legal.”
It’s true that the “overwhelming majority” of hedge funds aren’t “getting information on the sly,” said Matthew Goldstein in Reuters. But Galleon may not be part of that majority. It’s always had “something of a cowboy culture,” and it’s been in trouble with the SEC before. Hopefully this kind of “aggressive law enforcement” will help deter Galleon’s brand of “hubris and greed.”
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- The U.S. Marines are developing laser weapons. Here's why.
- Why the Supreme Court is allowing Texas to hold an unconstitutional election
- 3 horrific inaccuracies in Homeland's depiction of Islamabad
- Gamergate has backfired spectacularly on its nincompoop perpetrators
- How 1,000-year lifespans could remake the economy
- 43 TV shows to watch in 2014
- How to be the most productive person in your office — and still get home by 5:30 p.m.
- Why you should absolutely watch this confounding, wonderful World Series
- Rise of the machines
- House hunting: 6 stunning historic conversions
Subscribe to the Week