Inept Insider Trading
NEW YORK (TheStreet) — For such a wealthy, smart guy, Raj Rajaratnam looks like one poor, dumb criminal.
Rajaratnam, the billionaire founder of the Galleon hedge fund, is alleged to have conspired with six other people to make illegal trades based on insider information that brought in $20 million in profits, according to a pair of criminal complaints filed in U.S. District Court in Manhattan last Friday. Some of those sketchy transactions involved shares of Google
Too bad he allegedly blew it all — and more — on a failed attempt to game shares of chipmaker Advanced Micro Devices
According to The New York Times, Galleon Group bought $85 million to $90 million worth of AMD stock from August 2008 to October 2008. The purchases were made after Raj and alleged co-conspirator Danielle Chiesi clandestinely learned from an IBM executive that the government of Abu Dhabi would invest billions of dollars in AMD. Chiesi worked at New Castle Funds, a hedge fund closely associated with Galleon, which also took part in the trade.
Galleon held on to nearly all its AMD stock after the deal was announced, says the Times, only to see it resume its plunge during the rest of October. In total, Galleon lost about $30 million on AMD, more than wiping out his gains from his other allegedly unlawful trades. The hedge fund manager is now out on $100 million bail and proclaiming his innocence, despite wiretaps and extensive evidence pointing to the contrary.
Dumb-o-meter score: 95 — Sorry, Raj, but the Justice Department likely won't be content with simply telling you, "Cheaters never prosper."