Akamai tied to insider trading case

Akamai is playing a bit part in the Galleon insider trading scandal that's rocking Wall Street, with one of its employees allegedly playing a starring role, furnishing 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.

Chiesi allegedly fed Rajaratnam insider information on Akamai that she had gleaned from a family friend who's an employee at the company. Bloomberg reports Chiesi traded information with her Akamai contact, prompting the source to call her Oct. 10, 2008 and promise her a "present" of information at a meeting in New York. On July 24, 2008, a Thursday, the Akamai exec allegedly also told Chiesi the company "was gonna guide down" earnings for 3Q2008. Prosecutors say Chiesi's inside information on Akamai allowed Galleon to short-sell Akamai stock, leading to a windfall of some $3.5 million after Akamai's stock price dropped some 20 percent. Prosecutors say Rajaratnam also bought put options on Akamai because f the insider information.

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

"This case should serve as a wake-up call for Wall Street," Preet Bharara, the United States attorney for the Southern District of New York, said at a news conference on Friday. He added that the investigation was continuing.

For more:
- see this Bloomberg article
- see this New York Times story

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