At this time a week ago, most Galleon Group employees were wondering how large their year-end bonuses would be. One devastating insider-trading case later, those same people now face long stretches of unemployment as their firm heads for the dustbin of hedge fund history.
Galleon's founder, Raj Rajaratnam, told clients on Wednesday that he will be closing his $3.7 billion fund operation as he fights the criminal and civil insider trading charges filed against him and six others last week.
Mr. Rajartnam insists he is innocent of all charges. But considering that Galleon's customers were demanding their money back en masse, he had little choice but to wind down his funds.
It's unlikely that a rival fund will acquire Galleon, whose assets mainly consist of its analysts and traders, their telephones, BlackBerries and other office gadgetry. That means soon-to-be former Galleon staffers will have to seek work during one the most depressing job environments for Wall Streeters in decades.
Although the stock market has rebounded strongly since its March nadir, hiring hasn't. In fact, securities industry employment in New York has declined by 5,800 since then, according to data from the U.S. Bureau of Labor Statistics. Last month, the headcount sank to 161,200, its lowest point since the recession began two years ago.
While there's typically a lag between a market recovery and a job recovery, it may take years for the latter to materialize. The city's Independent Budget Office forecasts that few of the 30,000 securities industry jobs shed in New York since August 2007 will return by 2013.
