"Goldman Sachs denies any Galleon insider trading wrongdoing "

[WhiskeyGirl]

I don't know how I missed this story -

Goldman Sachs has distanced itself from any suggestion of wrongdoing in the insider trading scandal surrounding the Galleon hedge fund.
 
By James Quinn, in New York
Published: 9:57PM GMT 29 Oct 2009

The US investment bank was a leading prime broker to Galleon but on Thursday denied playing any part in passing on insider information to the hedge fund.

The denial follows reports suggesting that Galleon paid hundreds of millions of dollars a year to major banks for access to information the general public did not receive. s

Galleon - headed by Raj Rajaratnam, who has been indicted on alleged insider trading charges – was reported to have received regular hints or market colour.

more here - http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6463158/Goldman-Saches-denies-any-Galleon-insider-trading-wrongdoing.html

[WhiskeyGirl]

By Grant McCool

NEW YORK, March 24 (Reuters) - Galleon hedge fund founder Raj Rajaratnam, accused of insider trading along with several associates, won a suspension of a court order to hand over wiretap evidence to U.S. market regulators, pending appeal.

The U.S. Court of Appeals for the 2nd Circuit in New York ordered a stay in favor of Rajaratnam and co-defendant Danielle Chiesi on Wednesday after a lower court order in February compelled them to disclose wiretap evidence gathered in the criminal case.

A trial on civil fraud charges brought by the U.S. Securities and Exchange Commission was set to start Aug. 2 before U.S. District Judge Jed Rakoff, but in an order Wednesday, he postponed it until Feb. 14, 2011.

Lawyers for Sri Lanka-born U.S. citizen Rajaratnam and former New Castle Funds LLC trader Chiesi are seeking to suppress 18,000 recordings in what U.S. prosecutors describe as the biggest hedge fund insider trading case in the United States.

Rajaratnam's lawyers argued before a three-judge appeals court panel on Tuesday that the use of the recordings in the SEC case ignored "the plain text" of the wiretap statute and privacy concerns.

Investigators said Rajaratnam, 52, and Chiesi, 44, made as much as $49 million of illicit gains after using tips from insiders to trade.

The criminal trial is scheduled to begin on Oct. 25, but both Rajaratnam and Chiesi are seeking separate trials. When there are parallel civil and criminal charges, typically the criminal trial takes precedence.

At least 21 executives, traders and lawyers have been hit with criminal or civil charges, or both. Ten have pleaded guilty, and eight, including some former Rajaratnam associates and Galleon employees, are cooperating with the government.

The appellate case is: SEC v. Galleon Management et al, U.S. Court of Appeals for the Second Circuit, No. 10-0462. The lower court case is: SEC v Galleon Management et al, U.S. District Court, Southern District of New York, No. 09-08811.

more here - http://www.guardian.co.uk/business/feedarticle/9003429

Dark pools offer some folks the ability to trade anonymously.  How would anyone in the SEC know about insider trading?

[WhiskeyGirl]

How hard is it to get executives to divulge corporate secrets? Apparently not hard at all - if you wear short skirts and low-cut tops. That's the conclusion drawn from an FBI probe into the alleged insider-trading activities of Danielle Chiesi, one of 19 charged in the Raj Rajaratnam/Galleon Group fraud case.

 Authorities say Chiesi, 44, a former analyst at New Castle Funds, a small New York hedge fund, used her feminine attributes to solicit Information and then pass it on to hedge fund managers like Rajaratnam.

If the FBI is correct, then the blonde, blue-eyed former teenage beauty queen appears to have found it remarkably easy to pry information from technology executives. One ploy, reports Bloomberg, was to go bar-hopping with a group, and then peel someone off to talk to on the dance floor. In the early 90s, at a different firm, she was known for showing up to work in a tight red suit with red fishnet stockings.

"It amazes me that grown, wealthy, successful, hard-working men fell for that," says Deborah Stapleton, an investor relations executive. Chiesi was proud of her network, too. "She bragged about her contacts in public," says Stapleton. "She was like a teenager who wanted everyone to know she knew some rock star."

more here - http://www.thefirstpost.co.uk/56500,business,the-danielle-chiesi-way-to-pick-up-wall-street-secrets

I wonder who here contacts were?

[WhiskeyGirl]

According to reports in the Wall Street Journal and the New York Times, Roomy Khan worked at Galleon briefly in the 1990s. Facing financial difficulties, she approached Rajaratnam in 2005 hoping to be rehired. When he allegedly asked whether she had any inside information about public companies, she responded that she could get access to information regarding Polycom, the Silicon Valley maker of audio and data-conferencing products.

(Google has announced it is suspending its use of Market Street pending an investigation. Lawyers for Market Street said neither the firm nor its current employees were implicated in the Galleon insider trading investigation.)

Khan began cooperating with the SEC in November 2007 after the New York Stock Exchange picked up unusual trading in Hilton stock. In January the following year, she agreed to a wiretap of her conversations with Rajaratnam, which eventually led to his arrest in what appears to be Wall Street's biggest insider trading scandal in years. 

If this is the 'biggest' story in years, why isn't it on the news like Madoff?

more here - http://www.thefirstpost.co.uk/55045,people,news,roomy-khan-the-woman-who-ratted-on-rajaratnam

Who are the other 17?

[WhiskeyGirl]

Sri Lankan authorities are also investigating whether Rajaratnam financed prominent front organizations for Tamil rebels in that country.

In all, six of the 21 people charged in two overlapping insider- US-trading schemes have pleaded guilty. Investigators used wiretaps - normally reserved for organized crime and drug cases - for the first time ever in probing insider trading.

US prosecuting attorney Preet Bharara has likened the white- collar crime to mafia practices and said it spread far beyond the 21 arrests.

Read more: http://www.earthtimes.org/articles/show/310052,rajaratnam-trial-slated-for-october-for-insider-trading-scheme.html#ixzz0jCJRurbh

Who are the other 21?

[WhiskeyGirl]

Rajaratnam  has denied the government's allegations, but acknowledges that some of those named were friends, former employees and associates. He's known two of them since attending the Wharton School of the University of Pennsylvania in the early 1980s, and others since his days covering Silicon Valley's semiconductor industry for Needham, an investment bank.

Ali Far, 47, of Saratoga, co-founded the Spherix hedge fund in San Jose in January 2008 after four or five years at Galleon as a portfolio manager and semiconductor analyst. Spherix lasted less than a year before its operators were tripped up by the federal investigation of Galleon. Far and Spherix co-founder Richard Choo-Beng Lee, 53, of San Jose, pleaded guilty to insider trading charges and have become cooperating witnesses in the case. Far's plea covers insider trading charges from 2003 to 2009. Most of that time he worked for Galleon.

With advanced degrees from Santa Clara University in engineering and law, Far seems an unlikely candidate to face federal charges. It is unclear how he and Rajaratnam first met, but Far began his career in 1983 at Analog Devices (NYSE:ADI) and worked for several other valley chip-makers before joining Galleon in 2003 and leaving to found Spherix in 2007.

"From 2003 to March of 2009, I and other individuals ... conspired to engage in insider trading and wire fraud," Far told U.S. District Judge Robert Patterson. "We agreed to obtain material, nonpublic information, and exchange it with each other. We used it for the purpose of executing stock market trades."

Far testified that he paid cash to an executive at Marvell Semiconductor of Santa Clara for insider tips and said he also obtained inside information from an old friend who was an executive at Santa Clara-based Atheros Communications. (NASDAQ:ATHR)

Ali Hariri, 38, a vice president of Atheros, now faces his own insider trading charges. He has been placed on leave pending an investigation, the company said. Hariri's lawyer had no comment.

"We were friends for a long time," Far told a judge in October while entering a guilty plea. "When you're talking as friends the guards are down. You're not necessarily thinking, 'I give you this, you give me that,' " he said, according to a transcript of the hearing.

A court reporter transcribed Far's source at Marvell as "Sam Neary." Sam Miri, a Marvell executive who lives in Palo Alto, has not answered requests for comment. Marvell said Miri is on leave while it investigates the allegations.

Lee also had a distinguished academic pedigree, which included an MBA from UC-Berkeley. Lee once worked at Sun Microsystems (NASDAQ:JAVA) and Advanced Micro Devices and was a semiconductor analyst working with Rajaratnam at Needham before joining a hedge fund in Connecticut in 1999 and later a New York hedge fund.

Rajiv Goel, 51, of Los Altos, was a classmate of Rajaratnam's at the Wharton School, in the class of 1983. Goel went on to become a top Intel finance executive.

Another Wharton classmate is Anil Kumar, 51, of Saratoga. Kumar began covering the semiconductor industry in 1986 and became a top executive at McKinsey, a global consulting firm. He is charged with tipping Rajaratnam  about AMD negotiations on a major deal. Rajaratman said Kumar is a friend who never gave him inside tips on AMD. Kumar's lawyer said he emphatically denies the charges. Kumar is no longer working at McKinsey, the consulting company said Friday.

The government says Rajaratnam passed Kumar's tip along to Danielle Chiesi of the New Castle hedge fund in New York.

Federal agents listening to Chiesi's telephone calls dragged in the biggest Silicon Valley figure to be tainted by the case -- Hector Ruiz, former AMD chief executive and board chairman. Ruiz is reported to be the unnamed "AMD executive" the federal complaint says leaked confidential information to Chiesi. The government says Chiesi then leaked those tips to Rajaratnam and others.

Krish Panu, 52, of Los Altos Hills, was Galleon's designee on the PeopleSupport board. Panu is a former valley semiconductor executive who became CEO of AtRoad, a Fremont wireless tracking company Galleon invested in. After the sale of AtRoad, Panu joined Galleon last year as a managing director. He has not been charged with anything, and has not answered requests for comment.

About a dozen co-conspirators are described in SEC and U.S. attorney complaints. Some of them have been identified, but others have not been named at this point.

"I imagine some people in the valley are not sleeping well," said Elizabeth Nowicki, a law professor and former SEC attorney at Boston University.

http://74.125.93.132/search?q=cache:KUxd6WluP5oJ:www.traderoots.org/newsArticle.jsf%3FdocumentId%3D8a79116e2562caa201256675e2ce0663+Rajaratnam+friends&cd=6&hl=en&ct=clnk&gl=uk

I wonder, how many Galleon's Goldman has on it's books?

What about those dark pools?  Do they eliminate the pesky problem of insider trading and it's consequences?

[WhiskeyGirl]

Then, in 2004, the Internal Revenue Service found that Mr. Rajaratnam and Gary Rosenbach, another Galleon executive, had participated in a sham tax shelter to hide $52 million in income in 1999. To settle the case, Mr. Rajaratnam agreed to pay the $20 million in taxes, penalties and interest, and Mr. Rosenbach paid $13 million more. They then sued the lawyers and promoters who had created the shelter, saying they had not understood that the shelter might be illegal and demanding that the promoters cover the penalties they paid.

John Schrier, a lawyer and accountant who helped market the shelter, which consisted of a series of currency trades, said in a deposition that Mr. Rajaratnam and Mr. Rosenbach had been well aware of its purpose. “They were told that this was very aggressive,” Mr. Schrier said. “Their reply was, bottom line, we will earn more on the tax savings than we will ever have to pay back to the government.”

Correction: November 5, 2009
An article on Monday about the legal problems of Raj Rajaratnam, a hedge fund manager charged with trading on inside information, misstated an arbitration panel’s damage award to Mr. Rajaratnam and Gary Rosenbach, another Galleon executive, on their claim that they were misled by the creators and promoters of a tax shelter later disallowed by the Internal Revenue Service. Although the panel found that $10 million in damages and interest was due and that John Schrier, a lawyer and accountant who recommended the shelter, was 50 percent responsible, it did not award damages from Mr. Schrier, who was not a party to the arbitration. Mr. Schrier and KPMG, his former employer, had already settled a related lawsuit on undisclosed terms, denying wrongdoing. Because of an editing error, the article also referred incorrectly to Mr. Schrier’s role in the tax shelter. He helped market the tax shelter to Mr. Rajaratnam and Mr. Rosenbach; he did not create it.

More here - http://www.nytimes.com/2009/11/02/business/02insider.html?pagewanted=all

This sounds like the Greek problem. 

[WhiskeyGirl]

Companies like AmSouth and Regions are also struggling with the rising costs of compliance with stricter anti-money laundering rules under the Patriot Act. Two years ago, AmSouth was fined $50 million by the Justice Department and banking regulators for failing to detect suspicious activity.

http://www.forbes.com/2006/05/25/amsouth-bancorporation-0525markets11.html

Goldman has no responsibility for detecting any suspicious activity in the great bank failure of 2008?

From memory, AmSouth had customers that had some kind of ponzi scheme going, and AmSouth got the fine for not identifying the illegal activity.