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Insider Trading Arrests Rock Wall Street

NEW YORK ( TheStreet) -- Even as Oliver Stone shoots scenes from his Wall Street sequel in Manhattan's financial district, hedge-fund manager Raj Rajaratnam, one of the nation's wealthiest people, was arrested Friday on charges of insider trading.

Rajaratnam, founder of the Galleon hedge fund, is alleged to have conspired with six other people to make illegal trades -- some of which involved shares of Google (GOOG) and IBM (IBM - Get Report) -- that brought in $20 million in profits, according to prosecutors in the U.S. attorney's office for the Southern District of New York.

Raj Rajaratnam, billionaire founder of the Galleon Group, a major hedge fund, is led in handcuffs from FBI headquarters.

Among the other alleged conspirators were a manager at the investment arm of chip maker Intel (INTC - Get Report), a director at the influential consulting firm McKinsey, and an executive at IBM's Systems and Technology group.

Two criminal complaints filed in U.S. District Court in Manhattan indicated that an unidentified person had worn a wiretap as the case unfolded, recording conversations between the defendants.

Cinematic dialogue peppered the criminal filing. "I'm dead if this leaks," one of the defendants is quoted as having said. "I really am ... and my career is over. I'll be like Martha (expletive) Stewart."

According to Forbes' ranking of the richest people in the U.S., Rajaratnam, a former asset manager at Bear Stearns' hedge fund, has a net worth of some $1.3 billion.

The six defendants are also accused of making illicit trades in stock of Polycom (PLCM - Get Report), Hilton Hotels, which was taken private by Blackstone (BX - Get Report) in a leveraged buyout in 2007, and Advanced Micro Devices (AMD - Get Report).

-- Written by Scott Eden in New York

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Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.

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