The Galleon Group was a privately owned hedge fund firm that provided services and information about investments. The group was founded in 1997, and attracted employee’s from Goldman Sach’s and Needham & Co. The company made its profit and other companies by choosing stocks carefully. Raj rajaratnam was an analyst for Needham for 11 years before leaving to start Galleon Group, he took several employee’s from his previous firm of Needham. In the years of running Galleon group, Rajaratnam cultivated a flamboyant style of leadership.
In one stance he offered $5000 to anyone who shock themselves from with a stun-gun. In response, a member tried it and was hospitalized. Rajaratnam’s trouble with the law started in 2005 where he paid over $20 million to settle a federal investigation into a fake tax shelter to hide $52 million. The group also paid $2 million in 2005 to settle an SEC investigation into its stock trading practices. Rajaratnam had Intel employees leak information about sales and production.
Raj had deep network of acquaintances, even in Goldman Sach’s, and other corps. He was convicted of 14 charges, and was guilty on all charges, however Raj and his defense team plan on appealing the decision made. Questions 1. Are information gathering techniques like Rajaratnam’s common on Wall street? If so, what could regulators, investors, and executives do to reduce the practice? I believe so, people always want the upper hand in the competition of things so acquiring info to increase earnings will always appear on Wall Street.
Information and communications are playing an increasingly important role in economic and social development. Meanwhile, the recent developments in communications technology have progressively reduced the barriers to communicating over distances. At the same time, computers have enormously increased the capacity to accumulate and access information sources and data. Combined with communications ...
I don’t know what could be done to reduce the practice other than high- level of oversight. Altogether I believe pushing to ban these practice could be the best choice to stop illegal information gathering. 2. What are the implications of sharing confidential material information? Is it something that would affect your decision about how to trade a stock if you knew about it? Confidential information must not be divulged without permission from the information’s source.
It is an extensive concept that embraces business-related secrets as well as general information. This is definitely an issue that would affect my decision on trading a stock. 3. Do you think the secret investigation and conviction of Rajaratnam and other people in the Galleon network will deter other fund managers and investors from sharing non public information? Unfortunately no it won’t because there is always going to be a few bad eggs in the business world. There’s always going to be good and bad in everything.