Galleon's First Red Flag: 2001

Was a coverup in the works early on for alleged schemer Raj Rajaratnam? An internal document has surfaced showing that JPMorgan Chase, which gained exposure to the Galleon hedge fund when it acquired Bear Stearns in 2008, may have suspected the hedge-fund associates of wrongdoing as early as 2001, the Financial Times reports. The memo raises a red flag about Galleon founder Rajaratnam, who, along with five other associates, was charged this month with leading the largest ever insider-trading scheme involving hedge funds. The note was written by a JPMorgan Chase analyst, and alleges that Galleon members "liked to operate in the 'gray areas.'" The report went on to warn, “If these allegations are true, there are some serious issues about business conduct.”