Alleged Insider Trader Tries to Rally His Troops
Billionaire businessman Raj Rajaratnam is out on bail, so he stopped by Galleon Group, the hedge fund he founded in 1997, to give a pep talk to the staff. Things aren't going so well over there!
Investors have been leaving Galleon Group in droves since Rajaratnam's arrest last week on charges that he used a network of informants to acquire inside information that netted him $20 million in profits. Galleon Group's trading partners have filed redemption requests to withdraw $1.3 billion of the $3.7 billion managed by the company. Clients are concerned that Galleon Group's assets could be frozen in the coming investigation. The investor exodus has forced Galleon Group to sell tech stocks and other assets to raise cash.
Rajaratnam visited the Galleon Group's Madison Avenue headquarters on Monday for a rousing ten-minute speech. Some of the employees in attendance for Rajaratnam's visit were crying as he told them "I'm counting on you to take care of our investors" and vowed to fight the charges being made against him by federal prosecutors. Rajaratnam also sent out a letter to Galleon Group employees and investors in which he proclaimed his innocence and promised that he'd "continue to be here working for Galleon" and that "the firm will continue to serve its clients with effectiveness and integrity."
There is one bright spot for employees who don't share Rajaratnam's rosy outlook for the Galleon Group. Executive recruiters have alreay been approaching staffers at the dying hedge fund about jumping ship. Raj Rajaratnam may think his company still has some life left in it, but the vultures have definitely started circling overhead.