Moody's Analyst Allegedly Leaked Hilton Tip

NEW YORK (TheStreet) -- A Moody's(MCO Quote) analyst allegedly passed along a tip about Blackstone(BX Quote)'s plans to acquire Hilton Hotels back in the summer of 2007 to a cooperating witness in the insider trading case against the founder of hedge fund Galleon Group and others, according to a complaint filed Friday in a U.S. District Court in New York.

The complaint alleges the unnamed Moody's analyst, who was involved with the ratings on Hilton, called the cooperating witness in the case on July 2, 2007 to relate that Hilton was going to be taken private "at a price substantially above its publicly traded stock price."

The cooperating witness relayed this information to Raj Rajaratnam, Galleon's founder, whose Galleon Technology Funds then purchased 400,000 Hilton shares on July 3, 2007 at an average price $35.13 each, the complaint says.

After the closing bell on July 3, 2007, Blackstone announced its agreement to acquire Hilton for $20.1 billion, or $47.50 per share. Galleon sold its Hilton stake shortly afterward for prices of between $45.25 and $45.63 and booked a profit of roughly $4 million, according to the complaint.

The Moody's analyst, according to the complaint, learned of the impending deal when the company's lead analyst on Hilton, identified as a Moody's senior analyst and vice president, was contacted by Hilton executives. See the complaint here.

The complaint also says the cooperating witness ended up paying the Moody's analyst $10,000 after the Blackstone deal for Hilton was announced.