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SEC Galleon Complaint

SEC Galleon Complaint

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Published by Spencer Ante
Here is the SEC's complaint on the Galleon insider trading scandal.
Here is the SEC's complaint on the Galleon insider trading scandal.

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Published by: Spencer Ante on Nov 03, 2009
Copyright:Attribution Non-commercial

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01/07/2011

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Associate
Regiona'lDireCtor'".):-;
.
Attorney for PlaintiffSECURITIES AND EXCHANGE COMMISSIONNew York Regional Office3 World Financial Center, Suite 400
New
York, New York 10281(212) 336-0153UNITED STATES
DlSTRICT
COURTSOUTHERN DISTRICT
OF
NEWYORK
SECURITIES AND EXCHANGE COMMISSION,09 Civ.Plaintiff,-against-COMPLAINTGALLEON MANAGEMENT, LP,RAJ RAJARATNAM,
RAJIVGOEL,
ANlLKUMAR,
DANIELLE CHIESI,
MARK
KURLAND,ROBERT MOFFAT,and
NEW
CASTLE FUNDS LLC,Defendants.
Plaintiff Securities and Exchange Commission (the "Commission") for itsComplaint against defendants Galleon Management, LP ("Galleon"),
Raj
Rajaratnam("Rajaratnam"), Rajiv Goel ("Goel"), Anil Kumar ("Kumar"), Danielle Chiesi ("Chiesi"),Mark Kurland ("Kurland"), Robert Moffat ("Moffat"), and New Castle Funds LLC("New Castle") alleges as follows:
 
SUMMARY
1.
This case involves widespread and repeated insider trading at twoprominent hedge funds, Galleon, a multi-billion dollar New York hedge fund complexfounded and controlled
by
Rajaratnam, and
New
Castle. The sources
of
the insideinformation include Goel, a managing director at Intel Corporation ("Intel"), Kumar, adirector at McKinsey
&
Co. ("McKinsey"), Moffat, a senior executive at IBM, as well
as
executives and consultants at other well known companies. The inside informationconcerned market moving events such
as
quarterly earnings announcements, takeovers,and material contracts. The scheme generated over $25 million
in
illicit profits.
2.
The unlawful trading involved inside information concerning
10
differentcompanies, including Google, Inc. ("Google"), Hilton Hotels Corporation ("Hilton"), andIntel. Specifically:(i)A Polycom, Inc. ("Polycom") senior executive tipped an individual("Tipper
A")
to
material nonpublic information about Polycom's
.
.
Fourth Quarter ("Q4") 2005 and
Ql
2006 earnings. Tipper A traded
on
that information and, in
turn,
tipped Rajaratnam who traded on behalf
of
Galleon based on that information.(ii)A Moody's rating agency analyst tipped Tipper A to material nonpublicinformation about the impending takeover
of
Hilton
by
The BlackstoneGroup. Tipper A traded on the information and also tipped Rajaratnamwho traded on behalf
of
Galleon based on that information.(iii)
An
employee at Market Street Partners, a consulting firm, tipped TipperA
to
material nonpublic information about Google's Q2 2007 earnings.2
 
Tipper A traded on the information and also tipped Rajaratnam whotraded on behalf
of
Galleon based on that information.(iv) Goel provided Rajaratnam with material nonpublic information aboutIntel's Q4 2006,
Ql
2007 and
Q3
2007 earnings, and Rajaratnam tradedon behalf
of
Galleon based on that information.(v) Goel also provided Rajaratnam material nonpublic information about apending joint venture involving Clearwire Corporation ("Clearwire")and Sprint Nextel Corporation ("Sprint"). Rajaratnam traded on behalf
of
Galleon based on that information.(vi) As payback for
Goers
Intel and Clearwire tips, Rajaratnam traded inGoel's personal account on the basis
of
material nonpublic informationconcerning PeopleSupport, Inc. ("PeopleSupport"), which was acquiredby Aegis
BPa
Services Ltd. Rajaratnam also traded in Goel'spersonalaccount on the basis
of
material nonpublic information about theimpending takeover
of
Hilton, as additional payback for Goel's tips.(vii) Kumar provided Rajaratnam material nonpublic information aboutAdvanced Micro Devices Inc.'s ("AMD") pending transactions withtwo Abu Dhabi sovereign entities, and Rajaratnam traded on behalf
of
Galleon based on that information.(viii)
An
Akamai Technologies, Inc. ("Akamai") executive tipped Chiesi
to
material nonpublic information about Akamai's
Q2
2008 earnings.Chiesi then shared this information with Kurland, and Chiesi andKurlandtradedonthatinformationonbehalf
of
NewCastle. Chiesi
3

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