Updated on October 21 at 7:25 p.m. PDT: correcting, at bottom, for what the U.S. Attorney's office describes as "CC-1."
Think of it as a twist on the old rivalry between chip giants Intel and Advanced Micro Devices. But this time, the rivalry is about which company can make a hedge fund more money.
The complaint filed by the government against six people on Friday details how a relatively obscure Intel treasury executive and a prominent hedge fund manager allegedly participated in an insider-trading ring centered on an Intel investment. The document also shows alleged insider trading of AMD shares by an adviser from McKinsey & Company before the chipmaker spun off of its manufacturing operations.
The case revolves around Raj Rajaratnam, who founded the Galleon Group, a New York-based hedge fund that manages $7 billion in funds. Federal prosecutors charged Rajaratnam and five others on Friday with securities fraud, alleging they were involved in insider trading of some of the most well-known tech companies including Intel, Google, AMD, and IBM.
Jim Walden, a lawyer for Rajaratnam, said Friday, "My client is innocent and we are going to fight the charges," according to The New York Times.
Rajaratnam, a native of Sri Lanka, got his start as a semiconductor analyst at investment-banking firm Needham & Co. and parlayed this into the Galleon Group, where he had a reputation for particularly aggressive information-gathering tactics.
And one of his contacts was Rajiv Goel, a managing director of strategic investments for Intel's treasury group and one of the six defendants.
Goel is not well known inside--or outside--of Intel. In fact, he is an Intel executive apparently so obscure that CEO Paul Otellini said in a television interview Monday that he'd never even heard of him--yet somebody who has dragged the chipmaker into the biggest insider-trading scandal to hit Silicon Valley in years. When asked about the case in an interview with Fox Business News Monday, Otellini said his first reaction was, "'Who's Rajiv Goel'--I'd never heard of this guy," the CEO said, according to a Fox transcript. "He's a fairly low-level guy." Otellini added: "People are people. I don't want to judge him. He hasn't been arrested. I think he's only been charged. If this is true, he's out."
Goel was, in fact, arrested on Friday in San Jose, Calif.… Read more