Galleon founder Raj Rajaratnam, arrested Friday in New York, told investors he wants to keep the trading team together. (Louis Lanzano/Associated Press
)
Galleon chief plans to liquidate funds
Galleon founder Raj Rajaratnam, arrested Friday in New York, told investors he wants to keep the trading team together. (Louis Lanzano/Associated Press
)
NEW YORK - Raj Rajaratnam, the billionaire founder of Galleon Group charged last week by federal prosecutors with insider trading, told investors he will liquidate his hedge funds.
Galleon, which managed about $3.7 billion, is exploring alternatives for the business, according to a letter sent to investors yesterday. New York-based Galleon has been approached by unidentified parties interested in buying the company and an undetermined amount of its assets, according to a person familiar with the firm.
“I want to reassure investors of the liquidity of our funds and assure Galleon employees that we are seeking the best way to keep together what I believe is the best long/short equity team in the business,’’ Rajaratnam, 52, said in the letter. “I want to reiterate that I am innocent of all the charges.’’
Rajaratnam, one of six people arrested Oct. 16 on insider trading charges, is free on $100 million bail. Within three days of his arrest, investors asked to withdraw about $1.3 billion from Galleon, the person said. Founded in 1997, the firm was one of the three largest managers of technology hedge funds along with Bowman Technology Fund, which closed in 2001, and Andor Capital Management LLC, which shut down last year.
“The redemptions coming in were likely so large, and no one wants to be the last out the door,’’ said Brad Balter, head of Boston-based Balter Capital Management LLC, which allocates investments to hedge funds and is not a Galleon investor. “As an investor, you don’t want that in your portfolio, even if the charges haven’t been proven.’’
Galleon investors include Colgate University. The Colgate University endowment portfolio has invested with Galleon since 2005 and is “actively monitoring’’ the situation, spokesman Anthony Adornato said yesterday.
Notz, Stucki & Cie., a Geneva-based money manager, said yesterday it has a minimal investment of about $6 million in Galleon’s Buccaneer’s fund and it sees no reason to withdraw the money. The fund is not managed by anyone connected with the insider-trading investigation, spokesman Claude-Olivier Rochat said in an interview.
“The funds are there - it’s not a Madoff-type problem,’’ he said.
Galleon managed $7 billion at its peak last year.
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