Raj Rajaratnam: Alleged Ringleader of Insider Trading Circus

By: Daniel Carty
Topics: In The News

(AP Photo/Louis Lanzano)

Raj Rajaratnam, the alleged billionaire ringleader of a massive insider trading scheme, was a hard-driving boss who was insisted his traders and analysts always have an edge over the competition, according to recently published reports.

According to Bloomberg, Rajaratnam gathered Galleon Group's 70 analysts, portfolio managers and traders every morning and peppered them with questions, expecting them to have better information than their competitors. As the report notes, Rajaratnam's quest for money-making edges has now landed him in jail.

Rajaratnam was among six on insider trading charges. Prosecutors allege the group, which included executives at IBM, Intel, McKinsey & Co. and Bear Stearns traded insider information with Rajaratnam, who alone faces 13 charges of fraud and conspiracy.

A Wall Street Journal report ($) depicts Galleon Group as a high-pressure environment in which investors and analysts were berated if they failed to get enough information, though the pressure was usually directly applied by executives other than Rajaratnam.

"Get an edge or you're gone," a former trader told the Journal. "Galleon is looking for that little bit of extra edge. That's what the firm is about."

Rajaratnam, a 52-year-old Sri Lankan native who attended the University of Pennsylvania's Wharton School of Business, was listed by Forbes as the 559th richest person in the world with a net worth of $1.3 billion.

He co-founded the Galleon Group in 1997, after 12 years at investment bank Needham & Co. where he rose through the ranks from analyst to become the firm's president in just six years. Galleon, which now manages $3.7 billion, turned in substantial profits even as the tech bubble burst earlier this decade and managed $7 billion at its peak in 2008, according to Bloomberg.

Rajaratnam also gave considerable money to charity. He formed a family foundation with his wife, Asha Pabla, that has given money to fight AIDS in India and donated $5 million to Sri Lankan victims of the 2004 tsunami, Bloomberg reports. The foundation also gave $400,000 to the Tamils Rehabilitation Organization in Maryland, an organization that was later accused of being a front organization for the Liberation Tigers of Tamil Eelam, a U.S.-designated terrorist group. A Galleon spokesman said Rajaratnam's donation was for rebuilding homes in Sri Lanka without discrimination.

Many of the charges Rajaratnam faces carry a 20-year maximum. A conviction at trial would mean at least 10 years in prison.

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by DebtGazette October 23, 2009 3:31 PM EDT: Sometimes it seems like the super rich are almost immune to the problems that plague us normal folk. It may be wrong, but it almost seems somewhat satisfying to see one of these ultra wealthy folks get into trouble.

The whole Wall Street mentality is one built on greed, so what can you expect. Here is a guy that is one of the wealthiest people in the country already, and he?s cutting corners to try and make even more money. When is enough ever enough?

We?ll have to wait and see how this thing plays itself out, but right now I?m hoping this guy goes down hard. The greed aspect of the case is just astonishing, especially in the light of the current financial situation across the country. How can people that have so much, cheat to get more; when so many of us have so little. It?s downright disgusting.

Check out my blog on Raj Rajaratnam, his insider trading, and insatiable greed at.... http://www.thedebtgazette.com/2009/10/billionaire-rajaratnam-in-trouble/; Reply to this comment