The US government’s insider trading investigation in the Galleon Group hedge fund has seen Insight Research’s president arrested.
Mr. Tai Nguyen, who led the privately-owned investment research firm has plead guilty to one count of ‘conspiracy to commit securities fraud.’ In a further move, the US Securities and Exchange Commission has also gone after Mr. Nguyen, and has filed civil fraud charges against him.
Mr. Nguyen’s arrest is the latest in a distinct crackdown undertaken by the American government and its associated regulatory bodies in their attempt to catch those who use insider information for personal profit. In fact, this particular arrest marks the US attorney’s Manhattan office’s 70th arrest since August 2009.
This particular case has also led to peripheral arrests. The heads of Barai Capital Management and Sonar Capital Management, two of Mr. Nguyen’s clients, also acted on the information that Mr. Nguyen was receiving from a relative who worked in Abaxis’ finance department concerning quarterly earnings results. The trio acted on this knowledge before it was made public, and while Mr. Nguyen made $145,000 worth of profits, his two clients had pocketed a reported $7.2 million between them.
All three have now plead guilty, and join a swarm of others in the wider investigation into Galleon’s business.
Among the others to have fallen from grace include Raj Rajaratnam, the co-founder of Galleon. Convicted last year of insider trading, Mr. Rajaratnam is now serving an 11 year prison sentence, and joins around 60 others that have been convicted in the wider investigation.
The investigation has also stretched across to McKinsey consultancy, and Rajat Gupta, the firm’s former head, (and, incidentally, an ex-director of Goldman Sachs) who allegedly communicated with Mr. Rajaratnam over the bank’s business to facilitate illegal profits. Mr. Gupta’s sentencing looks like it will wait until October.
The FBI’s involvement in the case is now said to span more than 300 other suspects of illegal financial trading, and are said to be interested in spearheading investigations into each of them over the next five years.
Mr. Nguyen will certainly not be the last.