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.”
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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.”
