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Hedge Fund Hanky-Panky

4:05 PM -- The big news over the weekend was the arrests around hedge fund Galleon Group, with federal prosecutors charging six people, including founder Raj Rajaratnam, with insider trading.

It's very much a Valley story, with Intel Corp. (Nasdaq: INTC) and Advanced Micro Devices Inc. (NYSE: AMD) featured prominently. Rajiv Goel, an executive with Intel's treasury department, was one of the six indicted. And one of the more dramatic anecdotes to come out of federal documents includes the time traders got leaked news about AMD spinning off its manufacturing.

For those just catching up with the case, here's the telecom angle: Two of the cases investigators homed in on involve Akamai Technologies Inc. (Nasdaq: AKAM) and Clearwire LLC (Nasdaq: CLWR).

Galleon allegedly got early word about the Sprint Corp. (NYSE: S) joint venture with Akamai, which would be announced in May 2008. That information, though, got leaked to The Wall Street Journal early. (See CLWR Ride Gets Wilder , Clearwire's Rumor Ride, and Sprint, Clearwire Create $14.5B WiMax Giant.) So, Galleon made just $579,000 on the information, according to San Jose's Mercury News. (Fortune says it was $780,000.)

The Akamai deal seemed to get less attention, at least in the local papers, but it involved bigger numbers. Galleon and another hedge fund, New Castle Partners, allegedly made a tidy sum on the knowledge that Akamai was about to lower its guidance in July 2008. (See Akamai Shares Plunge on Q2 Miss, Lower Forecast.) They made $3.2 million and $2.4 million, respectively, Fortune reports. (Two New Castle executives are among those indicted.)

— Craig Matsumoto, West Coast Editor, Light Reading

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