November 5, 2009
Government Charges 14 Defendants with Insider Trading
The government's investigation into insider trading and hedge funds continues. The government today charged 14 defendants with insider trading in complaints connected to the charges filed against hedge fund manager Raj Rajaratnam. Defendants include money managers and an attorney at a firm that works on private equity deals. The U.S. attorney for S.D.N.Y., however, says it "would be a mistake" to think the investigation focuses solely on hedge funds. Stay tuned for further developments. NYTimes, 14 Charged With Insider Trading as Galleon Case Grows.
In addition, the SEC today announced additional charges in its insider trading enforcement action against billionaire Raj Rajaratnam and Galleon Management LP by charging 13 additional individuals and entities, including three hedge fund managers, three professional traders at New York-based Schottenfeld Group, and a senior executive at Atheros Communications, a California-based developer of networking technologies.
The SEC also charged a pair of lawyers for tipping inside information in exchange for kickbacks as well as six Wall Street traders and a proprietary trading firm involved in a $20 million insider trading scheme.
In the press conference announcing the charges, Robert Khuzami, Director, SEC Division of Enforcement, emphasized that the alleged conduct was bad behavior, perhaps in response to published comments about the so-called "gray area" involving use of confidential information:
The ethical and legal judgments of these defendants were flatly wrong.
They weren't close calls.
They weren't nuanced.
They weren't in gray areas.
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