For the past three weeks, Raj Rajaratnam, former head of the Galleon Group, has been on trial for insider trading. It has been estimated that $45 million in profits or avoided losses were garnered by the hedge fund. Last week, a portfolio manager, Adam Smith, testified about how the hedge fund tried to avoid detection. The traders would make misleading transactions such as selling a portion of their position when they were tipped off on negative news. They would create emails designed to operate in the opposite direction of the inside information. The true intent of their trading would be conducted through faxes.
Two trades were mentioned specifically: ATI Technologies and Goldman Sachs. The ATI trade was made based on information from a Morgan Stanley investment banker. The Goldman Sachs trade was made based on information from a Goldman Sachs director, Rajat Gupta.
The news sources for the article are at:
Bloomberg article on ATI
Bloomberg article on GS
Reuters article on GS
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