Late last night the Financial Times broke the news that the hedge fund firm Galleon Group paid $250 million to its Wall Street banks last year in return for received market information that other investors did not get.
Those banks need to come forward immediately and explain what information they were selling to Galleon
The FT's report didn't specify which banks provided the information but noted that Morgan Stanley and Goldman Sachs were Galleon's top providers of hedge fund services and prime brokerage. Both declined to comment on the story. But the allegations are so explosive that both firms are going to have to start talking.
The problem is that Galleon allegedly got more than just "market color" or advanced looks at analyst views through market "huddles." The firm was known for pushing its contacts at banks for hints about big buy and sell orders. If either Goldman or Morgan Stanley were supplying this, it sounds like they were allowing the fund to front-run their other clients.
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