One of America's richest men was amongst six people charged yesterday in the largest-ever insider trading case involving hedge funds.

Three other executives charged over the $25 million scam work at IBM and Intel, the technology giants, and McKinsey & Co, the global consultancy.

The six were busted after a court approved the use of wiretaps in an insider trading case for the first time. An unnamed accomplice in the illegal trading ring turned Government witness and secretly recorded conversations with the six defendants.

Raj Rajaratnam, the founder of Galleon Group, the hedge fund manager, was charged by the US Attorney in Manhattan with four counts of conspiracy and eight counts of securities fraud.

The Sri Lankan-born 52-year-old was number 559 in Forbes' 2009 ranking of the world's wealthiest billionaires, with a $1.3 billion net worth. Galleon, which focuses on technology investments, had more than $7 billion under management at one time.

Preet Bharara, the US Attorney for the Southern District of New York, described the charges, which were accompanied by civil charges from the Securities and Exchange Commission, as a wake up call for Wall Street that greed was not good.

"Today, tomorrow, next week, the week after, privileged Wall Street insiders who are considering breaking the law will have to ask themselves one important question: is law

enforcement listening?'" Mr Bharara said.

Robert Khuzami, director of the SEC's enforcement division, said that the secret of Mr Rajaratnam's success was not "genius trading strategies".

"Raj Rajaratnam is not a master of the universe but rather a master of the Rolodex," Mr Khuzami said.

Also charged were Rajiv Goel, an employee of Intel, Anil Kumar, a director at McKinsey, Robert Moffat, a senior vice president at IBM, and Danielle Chiesi and Mark Kurkland, a portfolio manager and general partner respectively at New Castle Funds, a New York-based hedge fund manager that was created from the equity hedge fund group at Bear Stearns Asset Management.

Prosecutors allege that Mr Rajaratnam was at the center of an insider trading ring that exchanged non-public information about companies including Hilton Hotels and Google.

Court documents released yesterday said that the inside information about Hilton came from Moody's Investor Services, the ratings agency. A source at Market Street Partners, a San Francisco financial consultancy, provided information about Google.

These sources talked to the unnamed accomplice-turned-witness, who provided the information to Mr Rajaratnam. By trading on the insider information, Mr Rajaratnam's funds made a $12.7 million profit between January 2006 and July 2007, prosecutors allege.

The hedge fund manager also received information about McKinsey's clients, including two Abu Dhabi soveriegn entites, from Mr Kumar, who benefited from the insider trading because he was invested in the billionaire's hedge funds.

Ms Chiese, Mr Kurland and Mr Rajaratnam also exchanged and traded on insider information, some provided by Mr Moffat, on companies including IBM and Sun Microsystems.

Mr Goel, who worked in Intel's treasury department, provided information on the chip maker's quarterly earnings and a joint venture to Mr Rajaratnam, and was rewarded with nearly $250,000, according to court documents.

Galleon Group said that it was shocked by the arrest of its founder, who is considered to be the world's richest Sri Lankan. "We intend to cooperate fully with the relevant authorities," the fund manager said. "Galleon continues to operate and is highly liquid."

A McKinsey spokeswoman said: "The firm was distressed to learn that Mr Kumar has been arrested and is looking into the matter urgently."

An Intel spokesman said that Mr Kumar had been placed on administrative leave. "Intel was not aware of the case and was not and has not been contacted by authorities," he said.

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