In Roger Lowenstein's NYTimes story, you'll find several familiar people, including Raj Rajaratnam and Mark Cuban, at the receiving end of SEC's recent assault. Here's an excerpt from this gripping essay:
Then, in August 2006, the S.E.C. got a tip about a New York hedge fund, Sedna Capital Management. [Sanjay] Wadhwa [a lawyer in SEC's Manhattan bureau] was assigned to this case, too. Sedna was a small fund, but its manager, Rengan Rajaratnam, was the younger brother of Raj Rajaratnam, the head of Galleon Group, a $7 billion fund. Born in Sri Lanka and educated at Wharton, the elder Rajaratnam kept an extensive network of business associates, many of whom were also South Asians. Since 2000, his fund outperformed its peers by a stunning eight percentage points a year. Wadhwa’s focus began to shift to Raj, a gregarious, daring trader who reminded him of Plotkin.
... [T]he S.E.C. began an examination of Galleon, issuing subpoenas for its trading, telephone and bank records, its appointment calendars and e-mail. Wadhwa’s interest was piqued by the cryptic tone of Rajaratnam’s instant messages with Roomy Khan, a former Intel employee with extensive contacts in Silicon Valley. One, from Khan to Rajaratnam, urged the hedge fund magnate not to buy Polycom stock until she got “guidance.” Sensing the potential for a criminal case, the agency briefed lawyers at the Southern District, who agreed the case looked promising. Then, in March 2007, the S.E.C. received an anonymous letter on plain white paper claiming that Galleon traded tips in exchange for prostitution and “other forms of illegal entertainment.” The author hurled a taunting challenge at the regulators: “It hurts my heart to see how these guys make monkeys out of individual investors, S.E.C. insider trading regulations and the attorney general’s office.”
The S.E.C. could not identify the letter’s author, nor did prostitution figure in the eventual charges. But that June, Rajaratnam trooped downtown to the S.E.C. for a formal deposition. The agency’s lawyers asked about insider trading — which he denied. Less than a month later, Hilton Hotels revealed that it was being acquired; Finra promptly notified the S.E.C. that Galleon had invested in Hilton before the news broke. Wadhwa was stunned by Rajaratnam’s brass.
Two weeks later, Rajaratnam did it again: Galleon sold Google just before it announced disappointing earnings. In November, an F.B.I. agent visited Khan and asked if she would be willing to talk about Rajaratnam. Khan replied, “What took you so long?” [...]