Galleon Scandle

[Ramacchandran]

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I was told that there is galleon scandle and that is going to affect the I.T. Indusrtries and may come down.

I wish to know what is this scandle based on and how that is going to affect I.T. Sector is it for Indian I.T. Also?

 

[KRS]

Dear Sri Ramacchandran Ji,

Just saw this. Galleon is the name of a hedge fund operated out of New York, by one Mr. Raj Rajaratnam, who is a billionnaire and is the richest Sri Lankan, but of Tamil origin. He used to be a stock analyst for IT industry and therefore knows a lot of IT leaders in various companies.

He apparently made $20 million using insider information and alleged to have a kick back scheme with some in the IT industry. FBI and the Securities Exchange Commission (SEC - the US govt. agency who oversee the adherence to the laws pertaing to the finacial standards), over the last two years have built a case against Mr. Rajaratnam by secretly tapping his phones as well as those who they suspected were in his scheme. This has netted several arrests, unfotunately with some of them being of Indian origin. This case will be tried in New York next year. Reading some of the information that FBI has gathered, it really looks damning for the accused.

This is not going to bring down any IT companies. Galleon is a small hedge fund compared to some other hedge funds. I think the immediate effect will be few people getting fired from the companies they were working for as well as the stock market in Sri Lanka took a beating as apparently Mr. Rajaratnam has substantial holdings there.

Hope this explains.

Regards,
KRS