A Florida investor who cooperated with a government probe of what's been called the biggest-ever hedge fund insider trading case has settled civil charges.
Papers filed in U.S. District Court in Manhattan Thursday show that Roomy Khan of Fort Lauderdale, Fla., will give up $1.8 million in profits as part of a deal with the Securities and Exchange Commission to resolve civil charges. According to a consent order, she will owe $1.55 million in profits and an additional $304,398 in interest.
Khan, 51, was accused of conspiring from 2004 through November 2007 to trade inside information. She pleaded guilty last year to conspiracy, securities fraud and obstruction of justice and agreed to cooperate.
The probe has resulted in charges against 21 people. Already, 12 of them have pleaded guilty in a fraud the government has said reaped more than $50 million in profits.
The lead defendant in the criminal case is Raj Rajaratnam, the founder of the Galleon group of hedge funds. Rajaratnam was once listed as being worth more than a billion dollars. His lawyer has said he no longer is a billionaire. Rajaratnam has pleaded not guilty to criminal charges and maintained that he did not engage in insider trading.
The SEC said in its complaint that Khan first met Rajaratnam around 1996, when Rajaratnam worked at Needham & Co. and Khan worked at Intel. In the late 1990s, Rajaratnam hired Khan for a time.
The SEC said Khan approached Rajaratnam in late 2005 when she faced financial difficulties and asked if she could again work at Galleon. The SEC said Rajaratnam responded by asking whether Khan had inside information about any public companies.
It said she agreed to provide him with inside information about a public company in the hopes that she would receive future inside tips from Rajaratnam in exchange. The complaint cited several instances in which it alleged she later provided inside tips.