More Galleon Scalps

 
Galleon takes yet another scalp.  This one from Rajiv Goel - a 1993 Wharton classmate of Raj Rajaratnam and former executive at Intel.  From the US Attorney’s Press Release announcing the guilty plea: 
 
Specifically, in April 2007, GOEL obtained Inside Information regarding Intel's earnings announcement for the quarter ending in March 2007 from a colleague who worked at Intel. GOEL provided this Inside Information to RAJARATNAM on Friday, April 13, 2007, at which time Galleon Tech held a short position of approximately 1,150,000 shares of Intel common stock (worth approximately $23.5 million). Intel was scheduled to announce its quarterly earnings on Tuesday, April 17, 2007.
 
Between April 13 and April 17, 2007, after receiving the Inside Information from GOEL, RAJARATNAM caused Galleon Tech to cover its entire short position in Intel common stock and to purchase approximately 1.72 million additional shares of Intel common stock (worth approximately $36 million). These trades changed Galleon Tech's position in Intel common stock from short approximately $23.5 million to long approximately $36 million -- a swing of approximately $59.5 million -- in the three business days preceding Intel's earnings announcement. In addition, on April 17, 2007, RAJARATNAM also caused Diversified to purchase approximately 250,000 shares of Intel common stock.
 
Goel also provided Rajaratnam with information related to a pending Intel joint venture.  According to the complaint from the SEC, Rajaratnam bought stock on Goel’s behalf and presumably as a payoff for the information that Goel provided.
 
Galleon is a continuing object lesson for a new generation of investors and Rajaratnam is fast becoming the Ivan Boeksy of this generation.  Of course, the US attorney probably got lucky here.  Without a wiretap, both of the charges against Goel could have been hard to make stick. 
 
Read More Galleon Scalps in its entirety at the M&A Law Prof Blog.