As the holiday draws nearer, the Wall Street Journal is beginning to look like pages out of one of my favorite books, “Den of Thieves.” The lead character in the current edition is Raj Rajaratnam, founder of Galleon Group and hedge fund billionaire. The feds have been circling him and the insider trading ring he (allegedly) orchestrated like sharks in a feeding frenzy over the past several weeks. The allegations (and more recently, indictments) touch employees of blue chip firms like I.B.M., Intel, McKinsey & Company, Ropes & Gray, as well as employees of less known and defunct firms like New Castle Funds and Bear Stearns. The central witness in the case is Roomy Khan, who previously worked at Galleon in the late 1990s, and was later convicted of wire fraud in 2001 when she worked for Intel Corp. I’m sure this will give us finance geeks plenty of interesting reading well into the New Year.
What’s a bit confusing about the case against Mr. Rajaratnam is that apparently the SEC had investigated him as far back as 1990 based on suspicious trading patterns (but apparently couldn’t prove anything). Nineteen years later – Ka Pow! Mr. Rajaratnam is behind bars. Apparently some things just require a little patience.
Add to the Rajaratnam trading ring the allegations that have cropped up in the past few days about associates at private equity firms conspiring with investment banks to leak news to their options trading buddies about deals they’re working on to make a quick profit. And this morning the news hit that Steve Cohen’s ex-wife is suing him for another $300 million, claiming he traded on inside information in the mid-1980s before he left a small investment bank to build his $13 billion SAC Capital. I think his ex Patricia probably just got jealous of the $300 million package Elin Nordegren will get if she leaves Tiger Woods. Why else would she today – in December 2009 – come forward with information about insider trading that occurred 20+ years ago? C’mon, Patricia, seriously?
