While the identity of the Akamai exec who allegedly fed information to a figure involved in the massive hedge fund insider trading scandal that began unfolding last week is still a mystery, more details are emerging about just how much information the exec passed along.
The Boston Globe reported that even Akamai may still not know the name of the executive federal prosecutors say furnished information to Danielle Chiesi, a trader named as a co-conspirator with billionaire Galleon Group founder Raj Rajaratnam in the $20 million fraud. Prosecutors allege Rajaratnam had a network of informants providing inside information on high-tech companies, including Akamai, Google, AMD and Clearwire Corp.
Initial reports say Chiesi allegedly used an executive at Akamai, described as a family friend, to feed Rajaratnam insider information on Akamai. Prosecutors say Chiesi and the Akamai exec talked for 15 minutes on July 24, after which she called Rajaratnam and told him: “Akamai... I’m trading it tomorrow,’’ Chiesi said, according to one of the criminal complaints. “I just got a call from my guy... I was talking about the family and everything, and then he said people think it’s gonna go to 25 (dollars per share).’’ Chiesi also said that she told the Akamai source, “You’re the only person in the family who helps me,’’ reports the Globe.
The Globe said Akamai's stock closed the day at $32.18. Galleon and Chiesi's company began short-selling the stock, leading to a profit of $3.5 million for Galleon and $2.4 million for Chiesi's employer, New Castle Partners.
The Akamai exec also called Chiesi Sept. 9 to discuss the company's plans and whether it would be buying back stock or acquiring another company, the Globe reported. The exec also called her Oct. 10, 2008 with a promise of a "present" of information at a meeting in New York.
Rajaratnam has been charged with conspiracy and securities fraud. Also charged criminally by prosecutors and the Securities and Exchange Commission were Chiesi and Mark Kurland of New Castle Partners LLC, the one-time equity hedge-fund group at Bear Stearns Asset Management Inc.; Rajiv Goel, an Intel Corp. employee; Anil Kumar, a director at global management-consulting firm McKinsey & Co.; and Robert Moffat, a senior vice president at IBM
- see this Boston Globe article
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