NEW YORK (
) -- A
analyst allegedly passed along a tip about
'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
The complaint also says the cooperating witness ended up paying the Moody's analyst $10,000 after the Blackstone deal for Hilton was announced.
Moody's issued this statement in the wake of the news: "Moody's has strict policies against divulging confidential information, and the alleged wrongdoing by an individual at Moody's would be an egregious violation of Moody's policies and values."
The company also said: "Moody's fully supports the government's prosecution of insider trading and will provide every assistance in its investigation of this matter." Shares of the credit ratings provider were up 20 cents at $24.16 in late trades.
The federal complaint lists allegations of
related to Galleon's activities with regard to
and a number of other stocks.
Written by Michael Baron in New York