14 Charged in Insider Trading Case

More brokers taken down on Wall Street

By Jonathan Dienst and Hasani Gittens
|  Thursday, Nov 5, 2009  |  Updated 6:27 PM EDT
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14 Charged in Insider Trading Case

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Things are crooked on the Street.

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Seven more Wall Street brokers and businessmen were arrested by the FBI Thursday on insider trading charges, law-enforcement sources told NBC New York.

The arrests are a second wave of charges after the head of the Galleon hedge fund and numerous others were charged last month for alleged corruption on Wall Street. Prosecutors said although seven have been arrested, 14 people in all were charged in this latest sweep, with others expected to turn themselves in at a later date.

"When we announced our first arrests three weeks ago, I said this case should be a wake-up call for Wall Street," said U.S. Attorney Preet Bharara.  "Well, today the alarm bells have only grown louder."

So far, a total of 20 people have been accused in the ring, broken with an informant and taped phone calls, officials said.

"No matter how clever you think you are, if you traffic in inside information, there's always a chance that the person you conspire with is working for us," said Joseph Demarest, head of the FBI in New York.

Today's suspects include a Galleon Group employee who allegedly ran an insider trading network and an attorney who fed them secret information gleaned from his mergers and acquisition law firm.

Bharara revealed that five of the defendants named Thursday, most with senior positions at hedge funds, have already pleaded guilty to insider trading.

When the case broke last month, Galleon Group found Raj Rajaratnam, 52, ranked by Forbes magazine last year among the 400 richest Americans, was charged with conspiracy and securities fraud along with current and former executives from Bear Stearns, IBM, Intel Capital and McKinsey & Co. on October 16.

Rajaratnam, was ranked No. 559 by Forbes magazine this year among the world's wealthiest billionaires, with a $1.3 billion net worth.

Rajaratnam -- born in Sri Lanka and a graduate of University of Pennsylvania's Wharton School of Business -- had been described as a savvy manager of billions of dollars in technology and health-care hedge funds at Galleon, which he started in 1996. The firm is based in New York City with offices in California, China, Taiwan and India.

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