1. Presented by Karin Nellos

2. Insider Trading at
Galleon Group
 Raj Rajaratnam, top picture at
right, and at least five others
relied on a vast network of
company insiders and consultants
to make tens of millions in profit
(“Raj Rajaratnam-Galleon Group
Founder”, 2012, October 24).
 The insider trading took place at
the Galleon Group headquarters.
Tips and insider information was
delivered to Raj by telephone,
email, and texting. “Blatant tips
were passed that gave a trading
advantage”; coming
announcements and transactions
concerning trades on the stock
market, per Preet Bharara the
United States Attorney in
Manhattan, NY (“Raj Rajaratnam-
Galleon Group Founder”, 2012,
October 24).
 At least 21 defendants pleaded
guilty, including former
executives at IBM, Intel, and Bear
Sterns (“Raj Rajaratnam- Galleon
Group Founder”, 2012 , October
24).

3. Lack of Physical
Safeguards
Lack of
Independent
Checks
Overriding of
Existing Controls
 The elements of pressure for
Raj Rajaratnam to commit
insider trading was greed
and living beyond his needs.
Raj wanted more and more
money for the company and
himself and these stakes
were high. Raj wanted
success, even craved success
to make his company the
only company that Wall
Street investors would turn
to and Rajat Gupta wanted
Raj’s approval
(Albrecht,Albrecht, Albrecht,
& Zimbelman, 2012, p 143)

5.  Raj Rajaratnam was convicted and
sentenced to 11 years in prison for
committing the fraud of insider
trading. Raj made over $50 million
in profits from insider trading. He
was fined $10 million (“Raj
Rajaratnam – Galleon Group
Founder”, 2012, October 24).
 Rajat Gupta was convicted and
sentenced to two years in prison
and fined $5 million (Hurtado,
Glovin, & VanVoris, 2012, October
25).

7.  Bank of New York Mellon accused of cheating
clients in foreign exchange transactions. Bank
was alleged of misleading clients about the
method for determining what currency exchange
rates it used for certain foreign exchange services
(Longstreth, A., 2011, October 5).
 The lawsuit was filed in New York State Court by
New York Attorney General Eric Schneiderman.
 “Lawsuits targeted the “standing instruction”
service offered by the bank in which it provides
clients with an as-needed basis for foreign
exchange services. Prosecutors accused the bank
of promising clients the best available rate, but
instead giving them the worst or nearly the worst
and then making a profit for itself from the price
differential” (Longstreth, A., 2011, October 5).
 Manhattan United States Attorney Preet Bharara
filed in Federal Court on behalf of the
government.

8. WEAKNESSES WITHIN THE BANK’S
INTERNAL CONTROL SYSTEM
PREVENTION/DETECTION
 Lack of Independent
Checks
 Overriding of Existing
Controls
 These cases are ongoing
and have not been resolved
as of yet
 Detection of this fraud
would not be easy to spot
 Detection by clients noting
the policies in regards to
the currency exchange
rates and what they were
being charged might have
prevented this from going
on as long as it did

9.  Two separate lawsuits are seeking $2 billion and hundreds of millions of
dollars (Longstreth, A., 2011, October 5).
 Fraud Investigator Harry Markopolos, CFE, the whistleblower in Bernie
Madoff’s $65 billion ponzi scheme has cried fraud on Bank of New York
Mellon. Markopolos stated in a recent interview with “King World News”
“that between Bank of New York Melon and State Street, these two
institutions have stolen between $6 to $10 billion from tens of millions of
American’s retirement savings accounts” (LaRoche, J., 2011, October 7).

10. Albrecht, C.C., Albrecht, C.O., Albrecht, W.S., & Zimbelman, M.F. (2012) Recognizing the
symptoms of fraud. In Fraud examinations (4th
. ed., p 143). Mason, OH: Cengage
Learning
Ahmed, A. (2011, October 26) With Gupta’s Arrest, Insider Inquiry Goes Beyond Wall Street.
Dealbooks New York Times Retrieved from
http://dealbook.nytimes.com/2011/10/26/gupta-surrenders-to-authorities-on-insider-
trading/
Hurtado, P., Glovin, D., & VanVoris, B., (2012, October 24). Rajat Gupta Gets Two Year
Sentence for Insider Trading Bloomberg Businessweek Retrieved from
http://www.businessweek.com/news/2012-10-24/rajat-gupta-gets-two-year-sentence-for-
insider-trading#p3
LaRoche, J. (2011, October 7) And Now We Know Why Nobody Took Madoff Whistleblower
Harry Markopolos Seriously Business Insider Clutterstock Retrieved from
http://www.businessinsider.com/bny-mellon-fraud-2011-10
Longstreth, A., (2011, October 5) Update 3 – N.Y. Prosecutors Sue BNY Mellon Over Forex
Claims Reutors Retrieved from
http://www.reuters.com/article/2011/10/05/bankofnymellon-nyag-
idUSN1E7931ZS20111005
Raj Rajaratnam – Galleon Group Founder Convicted in Insider Trading Case (2012,
October 24) NewYork Times Retrieved from
http://topics.nytimes.com/top/reference/timestopics/people/r/raj_rajaratnam/index.html?s=oldest
&