Matthew Goldstein reports that’s gonna leave a mark:
A former hedge fund manager who is a key cooperating witness in the Galleon insider-trading probe was “consensually recording phone calls” with potential suspects until a week before authorities arrested Galleon head Raj Rajaratnam, according to a recently unsealed court filing.
The document suggests federal authorities had wanted to keep working with Richard Choo-Beng Lee in some “covert” fashion for quite some time — possibly even weeks or months after the October 16 arrest of Rajaratnam and five other people.
Galleon U.S. witness was taping calls for months [Reuters]
From Matthew Goldstein:
Ali Far and Choo Beng Lee, the former hedge fund traders turned government informants in the Galleon insider trading case, have admitted to engaging in illegal insider trading for many years, according to their cooperation agreements.
In the case of Lee, the agreements suggest that he engaged in illegal insider trading while working at Steven Cohen’s SAC Capital, the Connecticut-based hedge fund.
In the case of Lee, the alleged wrongful conduct dates back as far as 1994. In both cases, this would suggest the men engaged in insider trading while working at other hedge funds before setting up their own fund, Spherix Capital, in 2007.
Here is the relevant section of Lee’s agreement (which, oddly, sounds like something we might write in referring to the mothership– “a certain hedge fund located in Connecticut.” Also, and this is surely a coincidence, we’ve been told SAC’s president is out of the country until Monday. So, it falls to someone else– YOU KNOW WHO YOU ARE– to call us and defend a certain someone’s honor):
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As you’re aware, ten more people are expected to be charged with insider trading this week. Some of them may be connected to the Rajaratnam case. Others will be accused of dipping their wick elsewhere. The authorities refuse to give any hints as to who could potentially be perp-walking, forcing us to wildly speculate, since we can’t take the suspense! To that end, we’re just going to throw some stuff out there. Maybe it means something, maybe not! It’s all relative.
One of the cooperating witnesses in the Galleon case is Choo Beng Lee, who started Spherix Capital in March 2008, after working at Stratix Asset Management, a tech fund. Stratix was formed by SAC veterans Ian Goodman and Richard Grodin, and closed in December 2007, supposedly due to personal issues between the founders. Grodin then started Quadrum Capital, another tech-focused fund, around March 2008. We were told yesterday that Quadrum “abruptly” closed at some point last week. And apparently they really don’t want to talk about it, because the firm’s number is now out of service.
Update, 10/24: The WSJ has confirmed all of the above, and notes that Grodin had been subpoenaed for his trading records.
