Galleon Group founder Raj Rajaratnam and five others have been arrested and charged in a $20 million insider-trading case, prosecutors said.

At a press conference Friday, U.S. Attorney Preet Bharara announced that Rajaratnam, the founder of the Galleon Group and portfolio manager for the Galleon Technology Funds, has been charged with four counts of conspiracy and eight counts of securities fraud.

Galleon at one point had as much as $7 billion in assets under management.

"This is not a garden variety insider-trading case," Bharara said. "This case represents the largest hedge fund insider-trading case ever charged criminally."

Bharara also said he believed it was the first time that prosecutors had used a wiretap in an insider-trading case.

Rajaratnam was taken into custody Friday. In court documents, prosecutors said Rajaratnam had expressed to another individual that he believed a former Galleon Group employee was wearing a wire and that Rajaratnam had purchased a plane ticket to fly to London on Friday from New York's John F. Kennedy International Airport.

Others charged criminally in the case include Rajiv Goel, director in strategic investments at Intel Corp.'s (INTC) investment arm; Anil Kumar, a director at global management-consulting firm McKinsey & Co.; Danielle Chiesi and Mark Kurland of New Castle Partners LLC, the one-time equity hedge fund group at Bear Stearns Asset Management Inc.; and Robert Moffat, a senior vice president at International Business Machines Corp. (IBM).

Bharara said the investigation is ongoing.

The Securities and Exchange Commission separately brought civil insider-trading charges against Rajaratnam and his company. The SEC also brought charges against the five other individuals who had been charged criminally and New Castle. The regulator, in its civil case, claims the scheme netted more than $25 million in illicit gains.

Rajaratnam is expected to appear in federal court in Manhattan later Friday.

In a statement, Galleon Group said: "Galleon was shocked to learn today that Raj Rajaratnam was arrested this morning at his apartment. We had no knowledge of the investigation before it was made public and we intend to cooperate fully with the relevant authorities. Galleon continues to operate and is highly liquid."

The allegations put Rajaratnam at the center of several insider trades in which he allegedly caused Galleon funds to act on inside information or passed along tips to others.

In one instance, prosecutors allege that Rajaratnam, between January 2006 and July 2007, received nonpublic information about Polycom Inc. (PLCM), Hilton Hotels Corp. and Google Inc. (GOOG) and caused Galleon Technology Funds to make improper trades on that information. As a result, the Galleon fund earned more than $12.7 million, prosecutors said.

The sources included an insider at Polycom, a source at Moody's Corp. (MCO) who provided information pertaining to Hilton and a source at Market Street Partners who provided information pertaining to Google, prosecutors said. An unnamed cooperating witness, whom Rajaratnam has known since the mid-1990s in connection with the witness' prior employment, provided details of some of the alleged insider trading to prosecutors, according to court documents.

The cooperating witness received inside information from Rajaratnam and provided similar information to Rajaratnam.

Google declined to comment.

In another instance, Chiesi, the New Castle employee, allegedly received inside information regarding Akamai Technologies Inc. (AKAM) and Advanced Micro Devices Inc. (AMD) from an unnamed Akamai executive and Moffat, the IBM executive, prosecutors said.

She allegedly passed the information to Rajaratnam, who allegedly provided her with information regarding AMD and other publicly traded companies, the government said.

As a result of information Chiesi allegedly received from Rajaratnam, Moffat and others, New Castle earned a profit of more than $2.4 million, prosecutors said.

As an example, Chiesi allegedly called Rajaratnam on his cell phone in a wiretapped telephone call on July 24, 2008, to tell him that Akamai was planning to "guide down" the next Wednesday and internally the company expected its stock price was going to go down to $25 a share, prosecutors said.

Rajaratnam allegedly said he would be "radio silent" about the information and told her she had "a few more days" before they report, prosecutors said. She allegedly replied "Just keep shorting every day. We got a lot of days..."

After the company announced its expected earnings for the following quarter would be lower than analyst expectations, Rajaratnam allegedly called Chiesi to thank her for the information she provided, according to prosecutors.

A McKinsey spokeswoman said, "The firm was distressed to learn that Mr. Kumar has been arrested and is looking into the matter urgently."

Chuck Mulloy, an Intel spokesman, said, "We can confirm that Mr. Goel is an employee of Intel's treasury department, not Intel Capital. He's been placed on administrative leave as we look into this matter. Intel was not aware of the case and was not and has not been contacted by authorities."

-By Chad Bray, Dow Jones Newswires; 212-227-2017; chad.bray@dowjones.com

(Jenny Strasburg and Don Clark of The Wall Street Journal contributed to this story.)