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Galleon Winding Down Hedge Funds, Report Says

(AP Photo/Louis Lanzano)
Galleon Group, whose co-founder is allegedly at the center of an insider trading ring, is winding down its hedge funds, according to a Wall Street Journal report ($) Wednesday.

Billionaire money manager Raj Rajaratnam, who was arrested last week along with five others on charges of insider trading, informed employees and investors by letter of plans to close out the firm's hedge funds.

"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," the Journal quotes Rajaratnam as writing.

According to the report, one possibility is selling Galleon to another company.

The firm has reportedly started selling off some of its positions to raise cash in preparation for a spate of investors redemptions. No cash can be withdrawn, however, before Jan. 1, 2010 according to Galleon's redemption rules.

In the letter, Rajaratnam again denied the insider trading charges.

Galleon's hedge funds have enjoyed double-digit returns this year. An orderly wind down would likely prevent major disruptions to stocks and markets, the report notes.

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