Galleon Group, the New York hedge fund manager whose billionaire founder is at the centre of a $25 million insider-trading case, will wind down its funds and is exploring whether to sell the business.

In a letter to investors today, Raj Rajaratnam, the Sri Lankan-born Galleon founder, wrote: “I have decided that it is now in the best interest of our investors and employees to conduct an orderly wind down of Galleon’s funds while we explore various alternatives for our business”.

One of the options that Galleon is believed to be exploring is a sale of the group. According The Wall Street Journal, there have been expressions of interest in buying the business.

Mr Rajaratnam was charged on Friday by the US Attorney in Manhattan with four counts of conspiracy and eight counts of securities fraud.

His arrest prompted a run on the funds, with nervous investors thought to have asked Galleon to return almost half of the $3.7 billion it had under management.

The fund manager and five others are accused of using confidential information obtained from sources at high-profile companies including Intel and McKinsey & Co to wrongfully trade shares in some of America’s biggest companies.

The Securities and Exchange Commission (SEC), the US financial services regulator, has filed separate civil charges against the six individuals.

In his letter today, Mr Rajaratnam, who is one of the most highly regarded technology investors in the US, reiterated his innocence and said that he had received “innumerable expressions of support” since his arrest. He is free on $100 million bail.

“[I] will defend myself against these accusations with the same intensity and focus I have brought to managing our investors’ capital,” he wrote.

He also insisted that his funds were liquid. Investors are thought to have requested that Galleon hand back as much as $1.3 billion invested with the group’s funds.

Most of Galleon’s funds allow quarterly withdrawals, but the technology fund run by Mr Rajaratnam has monthly redemptions with a 45-day notice period. The next deadline for redemption requests is November 15. Galleon would start to pay out to investors on January 1.

According to financial bloggers, Galleon’s ten biggest holdings are mainly in liquid stocks, including eBay, Google, Apple, Bank of America, JPMorgan Chase, Cisco Systems and Dell.