The alleged insider trading by Raj Rajaratnam, the promoter of $7 bn hedge fund is big news because the sum involved in insider trading $20 mn is the largest of such cases so far. Proving charges of insider trading are notoriously difficult, but in this case it appears that FBI has wiretapped the needed evidence.
Anil Kumar, a co-founder of Indian School of Business who is a director in McKinsey is also allegedly involved having passed on some crucial information that he had as a consultant.
What to make of this alleged fraud? Galleon was apparently trading on information. Information is a double-edged sword. Privileged information when obtained illegally with a view to leverage it lands the informed in deep trouble. Information is power. It intoxicates and snares its possessor into an abyss unless it is carefully handled.
Galleon has an office in Mumbai also although its investments in India are marginal.
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