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- Title
IMPACT OF THE GALLEON CASE ON INFORMED TRADING BEFORE MERGER ANNOUNCEMENTS.
- Authors
Chira, Inga; Madura, Jeff
- Abstract
On October 16, 2009, the U.S. government charged Galleon hedge fund founder Raj Rajaratnam and five others with insider trading, in what was described by a key prosecutor overseeing the case as a 'wake-up call to Wall Street and to every hedge fund manager.' We find that the mean abnormal stock price runup of targets (a measure of informed trading) during the 26 months since the inception of the Galleon case declined from 5.12% to 2.84%. The early evidence strongly suggests that the Galleon case has sent a clear signal to the traders, and that the traders are listening.
- Subjects
MERGERS &; acquisitions lawsuits; GALLEON Group LLC; INVESTMENT advisors; RAJARATNAM, Raj, 1957-; INSIDER trading in securities; STOCK prices
- Publication
Journal of Financial Research, 2013, Vol 36, Issue 3, p325
- ISSN
0270-2592
- Publication type
Article
- DOI
10.1111/j.1475-6803.2013.12013.x