Galleon insider trading web extends back to 1990s

SAN FRANCISCO, (Reuters) – An informant in the  Galleon Group insider trading scandal had a history of sending  tips to the firm, according to a court document that surfaced  yesterday.  

The hedge fund run by billionaire Raj Rajaratnam received  highly confidential nonpublic information about Intel Corp from  the informant, Roomy Khan, as early as 1998, according to a  criminal complaint filed under seal in 2001.  

Last week, federal investigators brought criminal charges  against Galleon founder Raj Rajaratnam and five others in the  largest hedge fund insider trading case in history.  

Galleon, which managed $3.7 billion at the end of last  week and boasted strong returns through September, has told  investors it will wind down its funds.  

Information continued to surface on Friday, linking  previously unnamed informants and corporate executives to the  trading scandal, which has also entangled big names like  consulting firm McKinsey & Co, IBM, and ratings agency  Moody’s.  

Last week, the FBI said an executive with Polycom Inc had  passed on information regarding the company’s quarterly results  as part of the insider trading ring.  

Yesterday, Polycom, a videoconference equipment maker, said  in a filing with the U.S. Securities and Exchange Commission  that it had put executive Sunil K. Bhalla on administrative  leave, effective immediately.  

The company did not give a reason for the action, and  spokeswoman Caroline Japic declined to comment beyond the  filing. Efforts to reach Bhalla were not immediately  successful.  

Roomy Khan, the Galleon informant who worked at Intel in  1998, has been identified in several media reports as one of  the key witnesses assisting federal investigators in the case  that led to the recent arrests.  

According to reports, Khan is the informant known as  “Tipper A” in the SEC’s complaint, a hedge fund manager who  worked for Galleon in the 1990s and had acted as an informant  and tried to rejoin Rajaratnam in 2005 amid personal financial  difficulties.  

The criminal complaint filed in the U.S. District Court in  San Jose in 2001 accused Khan of sending billing reports,  product pricing, and sales data about Intel microprocessors for  the first and second fiscal quarters of 1998 to a fax machine  in Galleon’s New York offices.  

Khan has also been linked in media reports as the Galleon  informant with contacts at Polycom.  

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