Galleon probe extends reach
PROSECUTORS investigating UShedge fund Galleon have issued a subpoena to a former employee of SAC Capital Advisors, broadening the insider-trading enquiry.
The subpoena was sent to Richard Grodin, who worked for Stephen Cohen’s SAC Capital, but neither he nor Cohen is accused of any wrong-doing.
It is the first indication that the net is widening after Raj Rajaratnam and five others were implicated.
Grodin is part of a circle of traders connected by personal and professional ties, and it is alleged he is indirectly linked to inside information on Google being passed on.
It is claimed that Galleon maintained a network of informants who secretly passed on corporate news ahead of major announcements.
Sri Lankan billionaire Rajaratnam is thought to have received information about computing firm Intel from an inside source since 1998, as well as many other firms.
Rajaratnam is open to selling Galleon to a rival and to have already heard offers, and a management buy-out of the Asian arm of the company, to be led by Sree Vallipuram, has also been mooted.
Alongside Rajaratnam, Rajiv Goel, director of strategic investments at Intel Capital and Anil Kumar, director at management consultants McKinsey, are also accused.
Fellow accused Sunil Bhalla, senior vice president at Polycom, has been put on administrative leave, and at New Castle Partners founder Mark Kurland has been given a leave of absence, while former consultant Danielle Chiesi has had her relationship to the firm severed. All of the accused maintain their innocence.