A Brief Description of the Companies and People Involved in the Legal Violations.
Among the companies affected, by this insider trading ring was International Business Machines (IBM). IBM has a rich company history stretching back over 100 years. International Business Machines (2008) states that the current company was founded in 1911, with the merger of three 19th century companies: the Tabulating Machine Company, the International Time Recording Company, and the Computing Scale Company of America; to form the Computing-Tabulating-Recording Company. Continuing on, in 1914 Thomas J. Watson Sr. joins the company, and it is renamed International Business Machines in 1924 (p. 3). In 1936, IBM provides the equipment to the Federal Government, in support of the Social Security Act. (P. 10). IBM had to shutter its International business during World War II, however that capacity was used for Wartime production (P. 15). Not long after the War, in 1949, IBM promotes diversity, philanthropy, and begins to focus on recruiting minorities, women, and the disabled (P. 15). In 1952 Thomas Watson Jr. becomes president, focusing on electronic computing technologies, and codifies the unwritten culture and norms into rules and programs (p. 29). In the 1960s, Watson Jr., to stay ahead of the competition, made a “bet-the-company” move in the 360 mainframe computer systems, and was met with wild success (p. 47). Throughout the 1970s, IBM, continued to the mainframe computer, and in the 1980s, developed the first personal computers (P. 61). In the 1990s and into the 2000s, IBM begins to focus on new growth opportunities in services and software (International Business Machines, 2008, P. 73).
Other major companies that were affected include: Galleon Group LLC and New Castle Funds LLC. In January 1997, after spending 11 years working at Needham & Company, analyzing technology and healthcare sectors, Raj Rajaratnam founded Galleon Group (Bernheim, April 1997). According to Rajaratnam, Galleon’s fund delivered exceptional returns all throughout the technology boom of the 1990s, with the company’s flagship hedge fund rising 93 percent in 1999 (2013). As the technology bubble came to an end, Galleon’s funds didn’t suffer losses as many other funds did according to Berenson (Nov. 2009). Further more, Galleon didn’t suffer a down year until 2008 (Nov. 2009). After the Arrest of Rajaratnam in October 2009, according Pulliam and Zuckerman, Galleon saw a huge increase in withdrawal requests, to the tune of $1.3 billion of only $ 3.7 billion under management (Oct. 2009). Days later, after receiving the withdrawal requests, Rajaratnam sent a second letter to clients, informing them that the company would be winding down and returning investors money (Quinn, Oct. 2009). For all intends and purposes this was the end for Galleon Group.
The other above-mentioned hedge fund was New Castle Funds LLC. New Castle was formed in 1995 as part of the Bear Stearns Asset Management arm,...