A hedge fund founder and five other people were arrested in what the federal authorities say is the "biggest insider trading scheme ever involving a hedge fund" (NY Times) and the "biggest insider-trading ring in a generation" (Wall Street Journal). Those involved allegedly made $20 million on inside information about stocks like Hilton, IBM, Google and Advanced Micro Devices.

Apparently Raj Rajaratnam, a self-made billionaire (#236 on the Forbes list of Richest Americans) who founded the now $3.7 billion-Galleon Group hedge fund, was the center of the ring. The NY Times is actually pretty excited about it: "Even now, after the discovery of Bernard L. Madoff, the scheme outlined by law enforcement officials is the stuff of Wall Street thrillers, not seen since the days of Ivan Boesky two decades ago." Okay, the Wall Street Journal also reports, "The case against him reads like a thriller."

The feds used wiretaps, usually used in mob or drug investigations, with help from a Galleon employee turned cooperating witness, in their probe—and they say they'll use it more with financial investigations. One Bear Stearns-turn-New Castle employee arrested in the ring was Danielle Chiesi, who was taped saying, "I'm dead if this leaks. I really am... and my career is over. I'll be like Martha f---ing Stewart" and "If it leaks, I think I'm out of business ... Because ... who knows IBM? And who, who's in bed with AMD? Put Danielle's name on the f---in' ticket."

The other alleged insider traders are "Mark Kurland, a top executive at New Castle Funds; Rajiv Goel, a director at Intel's investment arm; Anil Kumar, an executive with the consulting firm McKinsey& Co., and Robert Moffat, a senior vice president at IBM"—Moffat was considered a possible IBM CEO candidate. Chiesi and Rajaratham apparently discussed whether Moffat was more valuable for information at IBM or if he should go to another company with stock they could trade.