Hostile work environment at Galleon Group apparently contributed to insider-trading scandal

Last month a Babson College professor wrote about the correlation between bad bosses and bad decision-making, and he explained the reasons why bad bosses played key roles in the chains of bad decisions that have led to the downfall of well-known companies such as AIG, Bear Stearns, and Lehman Brothers

Only one month later, we are witnessing yet another example of a company creating a hostile work environment that becomes a breeding ground for bad decisions which ultimately cripple the organization.  Galleon Group, the $3 billion hedge fund co-founded by Raj Rajaratnam that is now caught up in one of the largest insider-trading cases in decades. 

Rajaratnam and five other executives were arrested on Friday and were charged with securities fraud and conspiracy for their involvement in an insider-trading ring that allegedly traded on nonpublic information involving companies such as Google, Hilton Hotels, and IBM

Abusive bosses apparently created a hostile work environment at Galleon Group that put extreme pressure on its traders, by publicly humiliating or firing employees, to get valuable information about investment target companies. 

The Wall Street Journal reports that a “senior trader, Leon Shaulov, who wasn’t named in any federal charges, sometimes berated traders or analysts who couldn’t uncover enough information that could move stocks, say several current and former employees….Nearby, Mr. Rajaratnam would listen to the commotion through the glass door to his office. Through Galleon, Mr. Shaulov declined to comment.

People familiar with the matter say one of Mr. Shaulov’s regular targets was Gary Rosenbach, who helped start Galleon with Mr. Rajaratnam. One trader says Mr. Shaulov, in front of the rest of the staff, once turned on Mr. Rosenbach, screaming, “You’re a disease, you’re a jinx.”

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