US financial regulators have said the shares of Google and Polycom were caught up in a large insider trading scam, as the authorities arrested and charged a California-based hedge fund manager.

Doug Whitman, founder and manager of Whitman Capital, was arrested for his alleged insider trading involvement with Raj Rajaratnam and the Galleon fund - which was found to have traded illegally in a range of shares from different technology and financial companies.

Whitman Capital itself is also charged with involvement. Rajaratnam of Galleon is currently serving an 11-year jail sentence.

Doug Whitman pleaded not guilty to charges of conspiracy and securities fraud, and was released on a $1.5 million bond. His lawyer has said he traded on well-researched, lawful information.

Financial regulator the Securities and Exchange Commission (SEC) said that Whitman and his company illegally traded the shares based on inside information obtained from Roomy Khan, who was Whitman's friend and neighbour as well as an associate of Rajaratnam.

Khan, a former Intel employee and Galleon trader who has already pleaded guilty to insider trading, allegedly tipped Whitman with confidential pre-release details - about unified comms vendor Polycom's fourth quarter 2005 earnings and search engine giant Google's second quarter 2007 earnings.

The original sources of the inside information were a senior vice president at Polycom and an investor relations staff member working for Google, the SEC said. Google and Polycom have not yet commented, and are not apportioned any blame by authorities.

Whitman Capital reaped nearly $1 million (£636,000) from the tips, it is alleged. Doug Whitman himself allegedly told informants to use Skype for conversations, in order to avoid detection.

George S. Canellos, Director of the SEC's New York Regional Office, said: "Whitman engaged in what even he termed 'slimeball' activity and together with Khan brought new illicit meaning to the maxim 'help thy neighbour.'"

The SEC said it would continue to agressively pursue individuals and companies related to the Galleon case.