The Billionaire Raj Rajaratnam and founder of the Galleon Group have been arrested on the accusation of insider trading at the hedge fund. The authorities are deeming it as the biggest case in the hedge fund history. The amount of illegal profits which the accused has earned is around $20 million. The Galleon Group was founded by him in 1997 and managed funds around seven billion dollars. Few months back, Galleon’s Buccaneer funds rose at the rate of 13%. Raj was the main player in making the illegal profits. FBI apprehended him and other co-accused persons on Friday.
The financial fraud and the illegal profits have damaged the standing of Wall Street. In the previous year, Bernard Madoff had already damaged its worth. The “galleon” scandal is another set-back to the US banking. Hedge funds were introduced to extract money from the wealthy businessmen and pension fund by attracting them with the high rate-of-return temptation. But all they do is nothing but the gimmickry and sophistry of figures keeping their own interests intact.
These sorts of funds are usually not transparent with less regulation. FBI and other authorities said that recent arrests prove that they are equally sensitive and aggressive towards the financial offenders as if they are gangsters or cocaine smugglers. “This case should be a wake-up call for Wall Street,” said Preet Bharara, US Attorney. The US attorney was quite apprehensive while commenting on the galleon scam and added that it is an eye-opener for hedge fund managers, traders and company managers who feel temptation towards such illegal profits.
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