Galleon funds to close

October 22, 2009 03:59:32 PM

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The head of a multi-billion-dollar US hedge fund at the center of an insider trading scandal announced Wednesday he was winding down the firm.

In a letter to investors, published by US media, Raj Rajaratnam, head of Galleon Management LP, said it was in the best interests of investors to "conduct an orderly wind down of Galleon's funds while we explore various alternatives for our business."

The fund is worth an estimated 3.7 billion dollars.

Rajaratnam was indicted on Friday in what the Securities and Exchange Commission described as "the biggest hedge fund insider trading case ever brought."

He faces up to 20 years in prison for allegedly receiving insider information on well-known companies including Google, IBM and Hilton.

The SEC complaint alleges the illegal trading scheme netted some 25 million dollars.

Rajaratnam -- who was number 559 on this year's Forbes list of world billionaires -- and his co-defendants are charged with various violations of the Securities Exchange Act.

In Wednesday's letter, Rajaratnam said that investments would be honored and that employees would be looked after.

"At this important time, I want to reassure investors of the liquidity of our funds," the letter said.

"For those who have been my partners and supporters over the last 17 years, I sincerely thank you. I also want to thank you for the innumerable expressions of support I have received from you over the past few days."