Galleon sinks as Rajaratnam shuts up shop

GALLEON Group, the $3.7bn (&pound;2.2bn) hedge fund firm, is liquidating its funds after its billionaire founder Raj Rajaratnam was charged last week with running one of the biggest insider-trading schemes in history.<br /><br />Rajaratnam, who is on $100m bail after being arrested last week, said he is considering a sale of the firm to a rival and he is already thought to have been approached by interested parties.<br /><br />Investors in the funds would not be expected to get their money back until January next year at the earliest. &ldquo;I have decided that it is now in the best interest of our investors and employees to conduct an orderly wind down of Galleon&rsquo;s funds while we explore various alternatives for our business,&rdquo; said Rajaratnam.<br /><br />Since Rajaratnam&rsquo;s arrest, investors in the funds have tried to pull money out and by Monday redemption notices were thought to have already reached $1.3bn. <br /><br />Investors ranging from college endowment funds to bankers began demanding their cash back immediately after the news of the arrest broke on Friday. <br /><br />Galleon&lsquo;s roughly 130 staff are beginning to seek employment elsewhere, with many worried that their time at Galleon could hurt their chances with future employers.<br /><br />Rajaratnam also said Galleon&rsquo;s funds are liquid and its employees &ldquo;are seeking the best way to keep together what I believe is the best long/short equity team in the business&rdquo;.<br /><br />Galleon traders were thought to be selling many of the stocks it holds this week in an effort to raise cash to meet redemption requests.<br /><br />The Galleon collapse comes as the hedge fund industry is recovering from a tough period following the uncovering of a Ponzi scheme by convicted fraudster Bernard Madoff.