Tag: hedge fund

Hedge fund buys into Microsoft

ValueAct Capital Management said that it had invested $2 billion in software giant Microsoft and that boosted its share price by 3.6 percent yesterday.

The founder of the hedge fund, Jeffrey Ubben, revealed the fact at an investor conference in the US yesterday.

Although $2 billion isn’t a trivial sum, that investment only represents less than one percent of Microsoft’s total shares, according to the Wall Street Journal.

Ubben said his company invested in Microsoft because the company wasn’t appreciated by other investors.  Stock prices in Microsoft have been in the doldrums since 2002, unlike the stock price of, say, Google or for that matter Apple.

Two years ago, another investor, David Einhorn, also talked up Microsoft but at the same time he suggested it was time Steve Ballmer stepped down from the CEO position. Microsoft’s share price (MSFT: NASDAQ) closed at $30.79 last night.

Raj Rajaratnam found guilty on 14 counts

Raj Rajaratnam, the founder of hedge fund management group Galleon, was today found guilty of all 14 counts of securities fraud and conspiracy. The sentencing means that Rajaratnam could be spending many, many years in the clink.  

Rajaratnam was prosecuted following allegations he was paying company insiders for tips which allowed him to make money from investments – insider trading.

It was alleged that he managed to rip off the likes of AMD, Intel and ATI, making around $22 million and avoiding losses of $63.8 million as a result of information ahead of deals.

His lawyers had tried to keep him out of jail by maintaining for the six week trial that information was already publicly available. They went as far as bringing in papers from internal Galleon analysts showing that this was the case.

They’ll be as gutted as the US government and prosecutors are pleased at today’s result. The case has been full of twists and turns for all involved.

Only last week the case looked as though it could go back to square one when a juror had to be replaced after falling ill.

At the time, prosecutors had to give the OK to release transcripts of wiretap recordings to the jury, which were crucial to the prosecution. Prior to that other witnesses gave evidence against their old mate Rajaratnam. Ex-Intel employee Rajiv Goel was among them, who told the jury that he fed Rajaratnam insider information about his company.

A few weeks ago, jurors deciding the fate of Rajaratnam failed to reach a verdict after a week of deliberations, while there were more rumours that despite facing a long time in the clink, the Galleon founder had emergency foot surgery while he waited for the jury to return.

Raj Rajaratnam fraud case takes more turns

It looks like it’s a case of back to the start for the Raj Rajaratnam vs the US insider trading case, after a new juror had to join.

The juror had to be bought in after another was forced to drop out following a medical problem.  Although the newbie had been watching the proceedings in the trial, prosecutors are now having to go backwards while the jury begins fresh deliberations.

It was also confirmed that  prosecutors had renewed a request to give jurors transcripts of wiretap recordings, which had been instrumental to the case in attempting to prove that the Galleon hedge fund founder was guilty of 14 counts of securities fraud and conspiracy.

The new move is just another twist in the case, which has been turning for six weeks now, and follows requests  from the  jurors who asked for replays of several recordings as they did not have the transcripts to reference.

So far prosecutors in New York have had Rajaratnam under the spotlight, claiming that the hedge fund manager was embroiled in paying company insiders for tips which allowed him to make sure-fire investments.

Companies caught up in the rift include AMD, Intel and ATI, who all claim that  the mogul made around $22 million and avoided losses of $63.8 million as a result of information ahead of deals.

However, the trader’s lawyers dispute that he did nothing wrong and maintain that the information was publicly available.

So far his lawyers have undertaken steps to prove their client’s innocence. Last month they scrutinised papers from an internal Galleon analyst – who reportedly predicted that ATI was going to sell its stock months before anything happened.

To prove that the information was already in the media – something Rajaratnam has been saying all along – they also showed a range of news stories which speculated the AMD and ATI merger.

However, as the case has gone on, more and more witnesses have taken the stand against the hot shot. Most notably is ex-Intel employee Rajiv Goel, which among other things, told the jury that he gave Rajartnam information about the company.

At the time, the case took a turn when US prosecutors played the first wiretaps of phone conversations between the New York hedge fund and Goel.

Wiretap evidence is a central feature of the case, but the judge previously denied prosecutors’ request to provide jurors with transcripts after the defence argued that the recordings, not the written documents, qualified as evidence.

However, it’s all changed now and it won’t please Mr Rajartnam’s set. Just in case this shake up wasn’t enough, there has been more additions in the case which rather resembles a helter skelter.

Last week jurors deciding the fate of Rajaratnam failed to reach a verdict after a week of deliberations, while there were more rumours that despite facing a long time in the clink, the Galleon founder had emergency foot surgery while he waited for the jury to return.

It seems as though the whole sorry saga is back to square naught.

IBM ex-SVP gets six months in the clink for fraud

Robert Moffat, former senior vice-president at IBM, is to face sentencing soon for his involvement in the biggest insider trading case in history, which prosecutors say he thought he would get away with.

Moffat, who was at one point tipped to take on the job of CEO at IBM, admitted to fraud and providing accused hedge fund trader Danielle Chisei with insider information. Assistant US Attorney Reed Brodsky remarked that the two had an “intimate relationship”, but Moffat said his crimes were motivated by money, not sex, as if that makes it any better.

Prosecuters said that Moffat had “a misguided belief he could never be caught” and thus warranted at least a six month stint in prison, but his defence lawyers have called for him to be released on probation. The fact that probation is even being considered raises questions on justice, as fraud committed by a pleb and not a money’d ‘sleb would be face a harder rap.

Moffat attempted to defend his affair with Chisei by saying: “Danielle had an extensive network of business people. And she added clarity about what was going on in the business world. … I know in my heart what this relationship was about: clarity in the business environment.” He’s obviously been to spin school – clarity’s a new one to us.

Moffat’s involvement with the elaborate hedge fund fraud was discovered after a federal wiretap revealed Moffat giving confidential information to Chisei, who worked at New Castle Funds, which aided in a number of illegal trades. 

New Castle Funds co-founder, Mark Kurland, received a 27 month prison sentence for his involvement, while several other employees, including Chisei, are facing charges. Kurland’s sentence dwarfs the relatively small six months called for Moffat.

Kurland’s lawyers are suggesting Moffat’s role was larger than Kurland’s and want a reduced sentence to match. That call could lead to longer in the nick for Moffat if the courts agree.

Update Moffat has been given six months in prison and a $50,000 fine.