No doubt you’ve read about that sinking ship, the hedge fund formerly sailing under the banner Galleon and now taking on water. The New York Times reported that Galleon lost $30 million on one trade using insider information. Here’s the quote from today’s article, In a Fraud Case, a Deal that Lost Millions.

But if Mr. Rajaratnam was trading on insider information, apparently he was not very good at it.

A close examination of the trades that led to his arrest last week reveals a startling fact: In all, Mr. Rajaratnam lost millions from what prosecutors characterize as illegal trading.

Galleon was buying shares in AMD from August 2008 to October 2008, purportedly acting on material, non-public information. Insider trading or not—I have no clue. But stocks took a beating during those months in question. And the only way to make money was to short them. The market crash was so powerful, it negated the value of inside information.

Or is that “alleged” inside information?

Money managers are always trying to get an edge. But how many have crossed the line with inside information? We saw what happened last December when Madoff confessed. It seemed like new Ponzi schemes surfaced every day.

Are the charges against Galleon the SEC’s first salvo across the bow?