- Galleon founder remains free on bail but faces new charges
- McKinsey director Kumar pleads guilty to giving tips for money
- SEC amends its filing, broadens scope of charges
Galleon founder Raj Rajaratnam and former McKinsey co-director Anil Kumar face the prospect of new charges as the Securities and Exchange Commission seeks to broaden the scope of its investigation into Galleon and other entities.
The Reuters newswire reported on 21 January that the SEC had sought permission on 20 January to amend its civil complaint (http://tinyurl.com/yan6umd) against a total of 21 defendants, having learnt of an arrangement whereby Kumar was paid by Rajaratnam for insider tips which the latter was able to use to generate up to US$20 million of profits.
An emotional Kumar told the Manhattan federal court on 12 January that he understood that Rajaratnam would use the information to "trade securities," and that he understood that his own "conduct was unlawful," according to the newswire report.
The tips mostly related to companies including Advanced Micro Devices and a subsidiary of the online auctioneer Ebay.
Kumar, who faces a sentence of up to 25 years' imprisonment and met Rajaratnam in business school, received some US$1.75 million for the tips which he invested in the Galleon fund.
Rajaratnam is a defendant in two parallel cases: a criminal case being brought by the Federal Government in addition to a civil case brought by the SEC.
On 12 January Rajaratnam's lawyer said he would be filing a motion to suppress the use of the telephone recordings which make up much of the Federal government's criminal proceedings against him. At the same hearing the judge ruled that 52-year old Rajaratnam could remain free on $100 million bail – against prosecutors request that bail should be revoked.
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