Galleon: Hedge fund or mafia?
Is the government crackdown on hedge funds, complete with wiretaps, unfairly treating investors like mobsters?
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.”
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
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.”
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
-
What should you be stockpiling for 'World War Three'?
In the Spotlight Britons advised to prepare after the EU tells its citizens to have an emergency kit just in case
By Elizabeth Carr-Ellis, The Week UK Published
-
Carnivore diet: why people are eating only meat
The Explainer 'Meatfluencers' are taking social media by storm but experts warn meat-only diets have health consequences
By Elizabeth Carr-Ellis, The Week UK Published
-
Scientists want to fight malaria by poisoning mosquitoes with human blood
Under the radar Drugging the bugs
By Devika Rao, The Week US Published