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Another Goldman Sachs Employee Named In Insider Trading Probe: Reports

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Federal investigators are reportedly looking into whether a Goldman Sachs employee fed inside information to Raj Rajaratnam's Galleon Group
Federal investigators are reportedly looking into whether a Goldman Sachs employee fed inside information to Raj Rajaratnam's Galleon Group

Another Goldman Sachs name has been connected to the investigation of insider trading at defunct hedge fund Galleon Group.

Federal prosecutors and Securities and Exchange Commission officials are reportedly looking into whether a senior Goldman investment banker, Matthew Korenberg, fed inside information to a Galleon Group portfolio manager named Paul Yook, according to separate reports in the New York Times and the Wall Street Journal.

Investigators are said to be looking into whether Korenberg, who was based in California, passed non-public information to Yook about pending healthcare industry mergers -- including the 2009 Abbot Laboratories acquisition of Advanced Medical Optics. Korenberg has not formally been accused of any wrongdoing, the Times reports.

“For more than two years, the government has pursued an investigation with nothing to show for it,” Korenberg's attorney told the NYT. “There has never been any allegation of any tipping or insider trading by Matt Korenberg.”

The inquiries are part of an ongoing, three-year investigation into alleged insider trading activities involving Galleon. The hedge fund closed in October of 2009 after the firm's founder, Raj Rajaratnam and a number of his colleagues, were arrested on insider trading charges.

This past October, Rajaratnam was convicted and sentenced to 11 years in prison. Since then, the investigation has continued as federal officials seek to find who, outside of Galleon, was part of an alleged network of conspirators offering inside corporate information to Rajaratnam for use in his trading activities.

So far, three Goldman Sachs employees -- Korenberg, a salesman named David Loeb and a technology stock analyst named Henry King -- have come under scrutiny, as the Times points out. What is still unclear is whether other Goldmanites were involved too.

Last month, at a pre-trial hearing for Rajat Gupta (the former McKinsey & Company executive and Goldman director who is on trial for allegedly feeding inside information to Galleon), Gupta's lawyer told the court that a different Goldman employee was feeding Rajaratnam confidential tips about Intel Corp. and Apple, though he did not identify the person in question. It is unclear whether that person is one of the three named Goldman employees under scrutiny.

Last week, it also emerged in a pre-trial hearing that federal prosecutors in California were looking into whether a different Goldman executive leaked inside information about two companies to Galleon, as the Times reported. It is still not explicitly clear whether the employee mentioned last week is one of the three already named Goldmanites or whether it is also a separate person.

Gupta's defense could be bolstered by the suggestion that there were other contacts inside Goldman feeding inside information to Rajaratnam, the NYT points out.

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