Galleon's staff get ducks in row as founder cuffed
October 21, 2009
By Katherine Burton and Saijel Kishan New York
Galleon Group's analysts, portfolio managers and traders in New York were seeking legal advice and updating their CVs after the arrest of Raj Rajaratnam, the hedge fund firm's founder, led to a flood of redemption requests, people familiar with the matter said.
Rajaratnam, arrested on Friday for alleged insider trading and released on $100 million (R737m) bail, spoke to his employees this week, telling them in a speech that he would fight the charges. Rajaratnam also wrote to investors and staff.
"I am entirely innocent and will vigorously defend myself and our firm," Rajaratnam said. "As I move forward on my defence, I want to assure you that our commitment to our investors and employees will remain unwavering."
Redemption requests totalled $1.3 billion, the Wall Street Journal reported on Monday. The firm has assets of $3.7bn, including $1bn from Rajaratnam and employees, according to people familiar with Galleon.
Retaining clients and top managers might prove challenging as Rajaratnam fights the charges. At least two executive recruiters said they had already started talking to Galleon employees about moving to other hedge fund shops.
"I suspect the super majority of assets will be redeemed," said lawyer Ron Geffner.
"Certain portfolio managers and traders who have strong relationships with investors will find this an opportunity to start their own firms, or join other firms with assets in tow."
As Galleon employees fielded redemption calls at the firm's offices in Manhattan this week, some took time to seek legal advice, while others updated their CVs, people familiar with the firm said.
Galleon said business continued as usual. The firm's hedge funds managed out of Singapore had not received redemption requests after Rajaratnam's arrest and the business there was operating as usual, said a person with knowledge of the matter.
Galleon's investors include Rochdale Investment Management and Colgate University. - Bloomberg
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