Saturday, March 12, 2011 0 comments ++[ CLICK TO COMMENT ]++

Raj Rajaratnam Galleon trial gets underway

(Correction to the last sentence made on April 12, 2011, 9:45PM EST)

Perhaps the biggest investment-related corporate trial in 20 years, the insider trading charges against Galleon hedge fund manager, Raj Rajaratnam, just got underway. The New York Times' DealBook has good coverage of the case and some of you may find it interesting. Unlike many other trials, prosecutors have lengthy recorded conversations and you can listen in on them. Although brief, it sort of gives an idea of what happens in some of these (trading-oriented) hedge funds.

Here are some articles you may find interesting:

Accused insider trading network (according to SEC)
Who will be called to the stand?
Recap of first day of the trial
Select audio recordings
Transcript of trader talk

One good thing about fundamental investing is that tips don't necessarily make or break you, since you are in it for the long run and short-term price movements are a small bump on a long-term chart. However, the difference between inside information and primary research is always a blur. Some value investors rely on primary information, such as those gained from talking with management or employees, and such investors need to be careful and ensure they are not trading on material information. Even if the information is accidentally disclosed by some other party, you will be liable if you act on it. [CORRECTION: John from Bronte Capital corrected me and said this statement is false (unless you pay for it or engage in some sexual conduct). Does anyone know what constitutes insider trading? Are you only be liable for insider trading if you pay for it or compensate the other person in some manner?]

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