A high net worth investor and family office advisory, Rochdale Investment Management, has been one of the first institutional investors to have emerged as quitting Galleon Group, the firm hit after its founder, Raj Rajaratnam was arrested last Friday on insider dealing charges.

Rochdale is pulling money from Galleon’s hedge fund. The amount being withdrawn is worth around $2 million, according to FinAlternatives.

“We don’t conduct business with anyone who in fact violates the law,” Rochdale’s chief executive, Garrett D’Alessandro, was quoted by the news service as telling Dow Jones Newswires. “It’s one of our absolute conditions.”

The insider dealing allegations surrounding Galleon’s founder are yet another reminder of how the financial crisis has cast a harsh spotlight on the hedge fund industry and the need for tough due diligence by investors.

Mr Rajaratnam denies the allegations.