As federal investigators expand their allegations of insider trading centered on tech hedge-fund giant the Galleon Group, rivals are already looking to take advantage of the firm's desperation. Galleon cofounder Raj Rajaratnam told the firm's employees that he was innocent and would fight all charges, according to The Wall Street Journal, but many investors won't stick around for a trial. Galleon is seeing withdrawal requests of $1.3 billion from a total of $3.7 billion under management, the Journal reports.

Some rival hedge-fund managers already appear to be aggressively courting Galleon clients. "Look, that money has to go somewhere," a senior hedge fund manager told The Business Insider blog. "So we're working to make sure we get a huge portion of it."
As Galleon's traders update their resumes, the stock positions that the fund might be forced to liquidate if it unwinds are also taking center stage. Some blogs have listed Galleon's top holdings, with less liquid, smaller cap names like OSI Pharmaceuticals (OSIP), Huron Consulting (HURN), and Anadigics (ANAD) drawing particular scrutiny. The fund also counts high-profile tech names like Google (GOOG), Apple (AAPL) and eBay (EBAY) among big holdings.

But how much notice investors need to give Galleon for withdrawing their money remains unclear. Investors can take money out of Galleon's $350 million tech fund on a monthly basis, for example, but can only withdraw it every quarter with a 45-day notice period from its $1.2 billion Diversified fund, according to reports. Such withdrawal delays may buffet the share price of Galleon holdings, which have yet to demonstrate any overwhelming selling pressure.

Last week, investigators charged Rajaratnam with orchestrating an insider-trading scheme that included executives at tech stalwarts like Intel and IBM. Rajaratnam is accused of booking profits of about $20 million by receiving tips about market-moving information like earnings shortfalls and pending acquisitions in stocks of companies including Google and Hilton (HLNQ).

Free on a $100 million bail, Rajaratnam told employees on Monday morning that he was counting on them to "take care of our investors."

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