Deep Shah, an Indian-origin suspect in the largest ever hedge fund scam in the US is on the run and is believed to be in Mumbai, federal authorities have said.
Deep Shah, an Indian-origin suspect in the largest ever hedge fund scam in the US is on the run and is believed to be in Mumbai, federal authorities have said.
Shah, 27, and Gautam Shankar, 35, were among the 14 new suspects charged on Thursday in the $53 million insider trading scam by the FBI.
While Shah is a former analyst at the Moody's Investor Service, Shankar who has already pleaded guilty is a former proprietary trader at Schottenfeld Group in New York.
According to federal authorities, Shah gave insider information about Hilton Group takeover by Blackstone Group LP, to one Roomy Khan, 51, who has previously worked with Intel Corp. and Galleon who then passed it over to main accused Raj Rajaratnam who is of Sri Lankan-origin.
It is not clear at this point whether the US will request for the extradition of Shah, who is believed to be in Mumbai, or whether he can be tried in India.
Two other Indians were charged in the fraud earlier along with Rajaratnam, Galleon Group founder and one of America's richest men.
Rajiv Goel, director in strategic investments at Intel Corp's investment arm, and Anil Kumar, a director at global management-consulting firm McKinsey & Co, both 51, were charged for fraud last month. Rajaratnam was slapped with 13 charges, four counts of conspiracy and eight counts of security fraud.
Five out of the 20 charged, including Shankar, have pleaded guilty and a few are cooperating with the authorities.
A trader at Schottenfeld who lives in Connecticut, Shankar was accused of trading tips from one Zvi Goffer and has pleaded guilty to securities fraud.
He is also said to be guilty of passing on insider information on publicly traded companies, including Google Inc and Hilton Hotels.
The founder of Incremental Capital LLC, Goffer previously worked at Galleon and Schottenfeld, and gave tipsters prepaid mobile phones to avoid detection.
Galleon Group is a hedge fund with up to $7 billion in assets under management. Out of illegal profits of $20 million, Rajaratnam alone made $12.7 million in illegal profits for Galleon.
This is the first case to use authorised wiretaps and the investigators are still on the job.
"People will probably ask just how pervasive is insider trading these days? Is this just the tip of the iceberg?" US attorney Preet Bharara told reporters.
"We aim to find out," Bharara said and urged other parties involved in the scandal to fess up. "I urge you to come knocking on our door before we come knocking on yours."
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