Galleon Scandal Leads to Its Demise

• By the tickerspy.com Staff
• On 10:56 am EDT, Wednesday October 21, 2009

After surviving the recession, Galleon funds are poised to meet their demise.

According to today's report by The Wall Street Journal, a recent insider trading scandal has led Galleon Group to wind down all of its hedge funds. The company's founder, Raj Rajaratnam, said, "I have decided that it is now in the best interest of our investors and employees to conduct an orderly wind down of Galleon's funds while we explore various alternatives for our business," in a letter to investors.

The liquidation of the massive hedge fund could have a dilutive impact on shares of its largest positions. While there is no telling whether Galleon maintained stakes in the top-15 U.S.-listed holdings it disclosed at the end of Q2, it is the best indication of potentially impacted stocks.

As of the most recent filings with the SEC, Galleon had a significant stake in a handful of tech stocks, including online auction giant eBay (NASDAQ: EBAY - News), graphics technology player NVIDIA (NASDAQ: NVDA - News), search engine Yahoo (NASDAQ: YHOO - News), MEMC Electronic Materials (NYSE: WFR - News), and infrastructure services company VeriSign (NASDAQ: VRSN - News).

Galleon was also long the market via the SPDR S&P 500 ETF (NYSE: SPY - News) and had a sizable bet on OSI Pharmaceuticals (NASDAQ: OSIP - News).

Looking at tickerspy.com's graph charting the performance of Galleon's end-of-Q2 holdings from July 1 onward, one can see that the holdings have stayed ahead of the surging market.

Pro portfolio performance is based on institutions' top-15 holdings as disclosed in quarter-end filings with the SEC. Pro performance does not take into account additional holdings beyond the top 15 nor does it include positions that are not required to be disclosed by the SEC. As such, Pro portfolio performance should be considered an approximation and not a precise record of how an institution has performed over time.

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