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SAN FRANCISCO (MarketWatch) -- Galleon Group, the hedge-fund firm at the center of the industry's largest insider-trading case, generated gains last month as it unwound most of its positions, according to a letter sent to investors Wednesday.

Galleon, founded by Raj Rajaratnam, also said it's been contacted by several rival firms interested in its investment team.

"The Galleon funds performed relatively well in October, despite having to wind down our portfolios," the firm wrote in the letter, a copy of which was obtained by MarketWatch.

Galleon's Diversified Fund gained 0.91% last month, leaving it up more than 23% this year. It's now 97% in cash.

The Galleon Buccaneer's Fund was up 1.14% in October, leaving it up more than 15% in 2009. It's now 99% in cash.

The firm's Statistical Arbitrage Fund was the only vehicle to lose money on the month, ending down 0.33% in October, but it was up almost 18% this year. That fund is also 99% in cash now.

"We have been contacted by several investment firms who believe the Galleon investment team has value," Galleon wrote. "We are currently working hard to explore these strategic alternatives with the goal of finding a range of opportunities for our employees."

Rajaratnam, a billionaire technology trader who founded Galleon in 1997, was charged with insider trading last month in a case that's rippling through the $1.5 trillion hedge fund industry. See full story on the allegations against Rajaratnam.

Rajaratnam has said he's innocent of the charges. But the case has forced Galleon to shut down and return money to investors. See full story on Galleon's wind-down.