Sri-Lankan-born billionaire, others, arrested for insider trading

WASHINGTON - Raj Rajaratnam, the Sri-Lankan-born billionaire investment wizard who founded Galleon Group, was arrested Friday along with five others on federal charges of illegal insider trading.

The six individuals, who include former directors at a Bear Stearns Cos hedge fund, are suspected in a $20-million insider trading scheme which federal prosecutors said was the biggest ever fraud case involving hedge funds.

According to the charges, the scheme also involved Rajiv Goel of Intel Capital, Anil Kumar of McKinsey & Co and Robert Moffat of IBM Corp. Two former officials at Bear Stearns Asset Management, are Danielle Chiesi and Mark Kurland, who were affiliated with the firm’s New Castle Partners, were also arrested.

Rajaratnam’s Galleon Group is one of the world’s largest hedge funds, with branches in London, Singapore, Mumbai and Menlo Park, California.

The 52-year-old investor was identified this year by Forbes as the 559th richest person in the world, with a net worth of $1.3 billion, Bloomberg financial news service reported.

“The defendants operated in a world of, you scratch my back, I’ll scratch your back,” US Attorney Preet Bharara said at a New York press conference. “Greed, sometimes, is not good.”

Bharara said investigators used wiretaps for the first time ever in probing insider trading. Wiretaps are normally reserved for organised crime and drug cases.