On Friday October 16th, 2009, Raj Rajaratnam the billionaire founder of the hedge fund firm Galleon Group, and ex-directors at a Bear Stearns Cos. hedge fund was arrested by the FBI and accused of conspiring with others to trade based on insider information about several publicly traded companies, including Google Inc.
If convicted he will face maximum jail sentence of 20 years.
U.S. Attorney Preet Bharara, putting total profits in the scheme at $20.6 million, told a news conference it was the largest hedge fund case ever prosecuted and marked the first use of court-authorized wiretaps to capture conversations by suspects in an insider trading case.
According to a criminal complaint filed in U.S. District Court in Manhattan, Rajaratnam obtained insider information and then caused the Galleon Technology Funds to execute trades that earned a profit of more than $12.7 million between January 2006 and July 2007. Other schemes garnered millions more, authorities said.
Also accused were Rajiv Goel, who worked at Intel Capital as a director in strategic investments, Anil Kumar, who worked as a director at McKinsey & Co., and IBM Corp. executive Robert Moffat. The former officials at Bear Stearns Asset Management are Danielle Chiesi and Mark Kurland, who were affiliated with the firm’s New Castle Partners, which managed about $1 billion.
Raj Rajaratnam, was also a major contributor to the Hillary Clinton campaign and also the single largest known U.S. contributor to a charity, Tamil Rehabilitation Organization (TRO) allegedly linked to the Tamil Tiger terror group in Sri Lanka. The TRO was proscribed by the U.S.Treasury Department two years ago. The Treasury Department proscribing the TRO declared that it was a front organization of Sri Lanka’s Tamil Tiger outfit the United States designated as a Foreign Terrorist Organization FTO) in 1997 and that the charitable donation the TRO received were diverted to the Tamil Tigers in Sri Lanka to wage war against the Sri Lanka state.
The Tamil Tigers or LTTE was totally defeated in Sri Lanka along with the killings of its entire leadership in May this year.
Raj Rajaratnam recently (September 2009) pledged to donate a million US dollars to help with the rehabilitation of former LTTE combatants.
The Sri Lankan Tamil self-made billionaire hedge fund manager is now the 236th richest American according to the 2009 Forbes Magazine. He was listed as 262nd richest American in the 2008 Forbes magazine. As of early 2009, he is the richest Sri Lankan born person in the world.
Galleon Group's Titan Fund has returned 20% so far this year (2009), outperforming the Nasdaq by 33%. Rajaratnam started his career as an analyst at the investment banking boutique Needham & Co where his focus was on electronics. He was promoted to president 1991 and launched Galleon six years later.
According to Bloomberg News Galleon, which started as a hedge fund firm focusing on technology and health-care stocks, grew to more than $5 billion in 2001 from its start in January 1997. Rajaratnam founded Galleon with three other colleagues from Needham & Co. an investment bank that focused on technology and health-care companies. None of the other co-founders are still at the firm, according to a Galleon marketing document.
Galleon Management, the company’s advisory business, oversaw more than $2.6 billion at the end of March, mostly on behalf of hedge funds, according to regulatory filings it submitted to the Securities and Exchange Commission at the time. Rajaratnam held a 50 percent to 75 percent controlling stake in the advisory, the documents show.
Rajaratnam used “devices, schemes and artifices to defraud,” one of two complaints in Manhattan federal court says. Prosecutors said they used wiretaps on the billionaire’s phone. “A number of the calls intercepted over the wiretap consist of Rajaratnam either providing, receiving, or seeking material nonpublic information about various publicly traded companies,” a complaint says.
The case represents the first time wiretaps were used to target insider trading, U.S. Attorney Preet Bharara in Manhattan said at a press conference. Tips came from insiders and others at hedge funds, investor relations firms, and companies including Intel, IBM, McKinsey, and companies whose shares were traded in the scheme, Bharara said.
Prosecutors said they’ve been investigating the case since at least November 2007, when a person they don’t name in the complaint began meeting with agents of the Federal Bureau of Investigation. The person, who has pleaded guilty and is cooperating with authorities, had used inside information to trade securities and tipped Rajaratnam since 2006, prosecutors say in one of two complaints filed in Manhattan federal court.
The famous interior designer and millionaire Martha Stewart spend many years in jail after being convicted of insider trading.
- Asian Tribune -
Comments
(1) The trouble is that the
(1) The trouble is that the TRO had two faces. While helping the Tsunami refugees, the TRO also helped the LTTE. For that matter, to the LTTE, any organisation or person who offered help was very welcome, and received LTTE 'protection' in return ! This is well known. Please don't whitewash the TRO or any other organisation that helped the LTTE. At that time, particularly in the aftermath of the Tsunami, most citizens of Lanka were hoping that kindness would make the LTTE turn away from its stated objective of a separate state, achieved through violence, and therefore people took it for granted that it was alright to deal with NGOs like TRO. Remember that before the last war, the LTTE sat right on top of the pile of Lanka's humanity, using fear & intimidation. The situation was so hopeless that people stopped caring or even commenting.
(2) Also, I would like to comment on the number of Sinhalas & Muslims entering Canada as Refugees. Any Sinhala person who entered Canada did so by stating fear of the LTTE, and the chaos & death they caused even in the South. I do not know about Muslims, but the fact is that there are TAMIL MUSLIMS, a little known fact. It is only the Tamil people who spoke of rape of their women & accused the army of atrocities, & used this statement to obtain entry into Canada. This, we know now is a lie or highly exaggerated (see D.B.S. Jeyaraj's article in the Net). In the last war with the LTTE, the Lanka army behavior toward Tamil civilians was exemplary. It was the IPKF who was guilty of rape & plunder in the North, at the time they entered Lanka as a Peace Keeping Force. Please stick to the facts.
Dear Editor: Sorry, I posted
Dear Editor: Sorry, I posted it earlier to the wrong column.
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A writer to this column says : "As long as his (Rajaratnam's) donations were prior to the date on which the TRO was proscribed in the US, his actions will not be considered as illegal contributions". We do not agree with the above statement. As far as know, a person is guilty if he KNOWINGLY contributed to past misdemeanors of an Organisation he has funded over a period of time. Rajaratnam KNEW that the TRO acted together with the LTTE. Therefore, he is guilty.
Consider this story as an example to illustrate this point :
The Police catches a thief with some goods. This thief has been thieving for a long time. Is he guilty only of the present theft ? NO. He is guilty of past thefts as well. Also, according to the Law in most countries, even people who have INNOCENTLY bought the thief's STOLEN GOODS are deemed to be guilty of participating in the crime too !
Some people are trying to whitewash the criminal activities of Rajaratnam. At the first count, Rajaratnam's funds were obtained ILLEGALLY through insider trading. In the second count, he has disbursed some of these funds to an organisation (TRO, in this case), which has engaged itself to work with a terrorist organisation, the LTTE. As we all know, the crimes of the LTTE are too numerous to be listed here.
Tamil people of low caste have taken to INTERNATIONAL CRIMINAL ACTIVITY to raise funds. This fact cannot be whitewashed away, and it is a TAMIL ETHNIC ISSUE. Low caste Tamils & Tamil Dalits (Untouchables) must be educated in ethics & morality. That is the burning issue all TAMILS OF HIGHER CASTE and all the rest of us have to pick up and act on, like it or not. ACCEPT THE PROBLEM & SOLVE IT !!!
Please note that, including
Please note that, including at the time of the 2004 Tsunami, the TRO was one of the listed approved agencies through which donations could be made. In fact, one of my former professors in the U.S. managed to contact me at the time of the 2004 tsunami and told me that he wanted to hand over a donation to me so that I could forward it to whichever agency I wished. I, however, got a list of approved agencies published in the international press and told him to make his own selection. And the address of the TRO was one of the addresses I forwarded to him. And I got this from the list of approved agencies published in the international press.
And if Sri Lanka really felt that Rajaratnam was an LTTE supporter, WHY WAS PREZ RAJAPAKSE TRYING TO GET HIM TO MAKE DONATIONS TO SRI LANKA AS RECENTLY AS A COUPLE OF MONTHS AGO.
And don't overtlook that in 2004, at the time of the tsunami, Rajaratnam was on vacation in Sri Lanka with his family. And, as his spokesman has made clear, he made donations to agencies that were handled not only by Sri Lanka, but also by Tamil, Sinhala, and Muslim groups. And the TRO was just one of the many approved (at that time), agencies to which he contributed. IF WHAT I STATE IS INCORRECT, THEN PREZ RAJAPAKSE HAS TO BE IMPEACHED FOR KNOWINGLY SEEKING CONTRIBUTIONS FROM AN LTTE GUY.
So many Tamils in "Fraud" is Shameful
Raj Rajaratnam was touted by many Sri Lankan Tamils in Colombo as the epitome of Tamil success in the USA, and proudly contrasted against Sinhalese who were depicted as plodders/uncreative investors who had not been able to make the millions that Tamils had been raking in. Sri Lankan Tamils had succeeded in getting their tentacles into Harvard and other Ivy League Universities, Wall Street and the Investbank Banks, Congress through the Aide system, as well as many other elitist organizations.
About an year ago some of us received an invitation to attend an event hosted by Rajaratnam at a fancy hotel in Manhattan, whereby he was clearly attempting to lure Sri Lankans into some investment venture. Thank goodness that we did not bite! Although I am sure many others fell for it...and may end up with some of the consequences of Rajaratnam's arrest.
Some years ago, the Lankan Tamil success story touted around was that of Sanjay Kumar of Computer Associates fame....but he now languishes in jail too for having diddled his shareholders out of millions of bucks through falsified financial reports.
Many are the tales of LTTE-connected Tamils in Europe involved in fraud and illegal activities...credit card, phone card, Social Security fraud and scams, smuggling drugs, people, etc. etc. ..you name it, where they are into milking the financial systems of dollars, pounds, francs, and Euros.
What is sad is that deception and fraudulent activities went ignored while all that was respected was brilliance at the numbers game...just as were Enron and Madoff, etc. In addition, having milked Sri Lanka's education system to the hilt, Lankan Tamils have emigrated to these Western countries and have LIED about being a "discriminated minority", and falsely touted "traditional homelands" in Sri Lanka, in the attempt to legitimize the LTTE's suicide violence and in order to get support for residence. They have now ended up ruining the name of their own community.
Hopefully, all this serves as an eye-opener to the younger generations of Tamils in the Diaspora who should look for cleaner, more ethical ways to make money and earn the material success which they pursue so diligently. Hopefully too, the time is up for success at "cooking the numbers" towards a favorable bottom line being the only index for accounting and finance ability.
Human fallacy not ethnic fallacy
Those who contrast one ethnic group's superiority or inferiority over the other, be they Tamils or Sinhalese are doing so only because of their own personal insecurities and these only lead to further polarization between the two communities. Not to be apologetic, but it is unreasonable to depict these cases with Raj Rajaratnam and Sanjay Kumar as cases of greed and corruption particular to Tamils, but as examples of human fallacy - that can happen to anyone when one indulges in excesses. We must not overlook that there are top US business folks of Tamil, Muslim and Sinhalese origin who run their organizations with utmost integrity and professionalism. Please, let's not make this yet another event to humiliate one community over another. Incidentally, I personally know of very many Sinhalese who have graduated from the Ivy Leagues of Harvard, Yale, Wharton and Stanford who have made-it in their own professions, yes, and raking in millions. Such success is not a phenomenon exclusive to Tamils.
I agree with Dias. These
I agree with Dias. These human failures have nothing to do with ethnicity. It is ridiculous to draw parallels between these human failures, seen in members of all ethnic communities, and ethnicity. And I agree that these attempts to draw ethnicity into this matter does reflect on the personal insecurities of those who try to draw ethnicity into this matter.
One moment, people wholeheartedly support removing ethnic labels, etc., from political parties, and wax eloquent on the boundless benefits of this approach. And the next moment, they try to draw ethnicity into every conceivable matter. This does reflect a certain personal insecurity. And it also reveals the abject hypocrisy of these people.
Not too long ago, a Sri Lankan (could be more than one), was taken into custody by the Sri Lankan authorities for involvement some kind of credit card racket, which, if I am not mistaken, defrauded many ordinary Sri Lankans. If I were to draw ethnicity into this matter, it certainly would amount to racism, etc. This fraud perpetrated on ordinary Sri Lankans is not linked to ethnicity, but to the personal weakness of certain unprincipled people, and it would be utterly absurd for me, or anyone else, to draw in the ethnicity of the perpetrators of this fraud.
It is high time that the country begin to focus on moving the country forward. The present situation in the country offers a golden opportunity to remedy the blunders of our politicians right from the time of Independence.
And I saw a report just now that the Rajapakse Administration has been trying to obtain funds from Raj Rajaratnam for use in rehabilitating LTTE cadres and that Rajaratnam's arrest could adversely affect Prez Rajapakse's plan. Yes, some people simply cannot shake off their insecurities.
Tamils in Fraudulent/Illegal Activities
The large number of LankanTamils who have been arrested for various high level illegal and fraudulent activities by the US, UK, Canada and other European countries must say something about the fact that there is something amiss in that community. It certainly does not mean that every Lankan Tamil is a crook, but there is an element of "deception" that is acceptable and condoned by the community in their pursuit of goals as long as there is material success demonstrable, which makes for a very high average of illegal activities among the Lankan Tamil community. This is also true perhaps for the Sicilian Mafia.
I would expect the more ethical members of the Lankan Tamil community, and indeed other Lankan communities as well to be worried about this phenomenon rather than to try to defend it by deflecting accusations to the President of Sri Lanka for having sought funds from Mr. Rajaratnam! Perhaps some people did not want those funds to be made available to Pres. MR --who knows!!
Secularism not communilism
In this post-LTTE era where the Rajapakasa admininstration is striving hard to bring the communities together, perhaps it would help us to be more secular-minded than communal-minded, especially among those in the supposedly more evolved dispora expats - this is a mere suggestion.
Shoving Truth under the Rug
We have first got to face some facts before we try to find solutions....and the solutions no doubt have to aim at bringing the communities together.
But with all the lies and the deceit that have not yet been fully exposed, and are still unravelling, it is foolish and mulish to try to pretend that all is hunky dory.
Just look at today's news from Canada that 76 Lankan Tamils who paid $45,000 US each to get to Canada in a rusty boat...their spokesperson in Canada says they are desperate to leave Sri Lanka because their women are getting raped, etc...the usual harangue!
Now, why would men pay this kind of money to get out of Sri Lanka, while they leave their "raped" women behind there? And where did they get that kind of money?
Is it this kind of absolute balderdash that we are expected to close our eyes to in the the name of "bringing the communities together"?
P.L.E.A.S.E let's not go on pulling the wool over our own eyes. Let us look at the truth of what has come to be and what is still going on....If real solutions are to be found the truth has to be brought out, spoken outright, and discussed for ways to clean this up, not hidden under the rug in the false premise that doing so would result in communal harmony.
Style over substance
Irrespective of the inevitable obstacles we must be persistence in our individual and collective efforts to bring about lasting peace to the nation. No, we should never close our eyes to realities, bypass the truth or pretend otherwise - but we must strive to respond to conflict rationaly and respectfully instead of emotionally and disrespectfully. The words, tones, and styles we use in our communications are often even more critical than the content of our messages.
I do not think that we can
I do not think that we can generalize based on what a group of people told the Canadians. It is clear that these people trying to enter Canada are quite likely economic refugees. And this situation in which most Sri Lankans (Sinhalese, Tamils, Muslims, etc.) want to get the hell out of the country is due to the blunders of our politicians: due to their failure to focus on economic development and and instead focusing mainly on gaining power by driving wedges between the communities.
Also, do not overlook that their are quite a number of Sinhalese who gained asylum, especially in Canada, by posing as Tamils. They are all economic refugees. We can only hope that Prez Rajapakse understands these details and will get down to steering the country in a different direction. He has taken a few steps in this new direction. But the steps taken so far are still inadequate.
Economic Refugees and Tall Tales of Rape
I agree that these Lankan Tamils are economic refugees. In the past too such refugees have been for the most part Tamils, with some Sinhalese and Muslims thrown in who probably passed themselves off as Tamils in order to get easy refugee status. It is a long used ploy to come out with tall tales of rape, harassment and torture by people seeking asylum.
Unfortunately, the US State Dept. has used these very same allegations to fingerpoint Sri Lanka, so these statements cannot be dismissed that readily as some would wish them to be.
Sri Lanka is moving in the right direction but it is going to be slow. It is unrealistic to expect otherwise, with all the stumbling blocks being placed in the way of progress. For the last few months since the end of the war, Diaspora Tamils have been doing everything they can to prevent moderate Tamils from participating in these efforts, and have also put their energies into a campaign to tarnish Sri Lanka internationally so that through slowing the economic progress that can come through international assistance, the reconciliation and development processes WILL BE SLOWED DOWN.
Despite these constraints, progress is been made and will continue because whatever those OUTSIDE Sri Lanka may wish, the people IN Sri Lanka want these processes to continue.
Demise of yet another high profile Sri Lankan American
Yet another plausible indictment of a high profile Sri Lankan born American businessman in less than 5 years – second only to the indictment, conviction and imprisonment of ex-Computer Associate (CA) Chairman and CEO, Sanjay Kumar in 2007 who is serving a 12 years sentence for fraud. In Mr. Kumar’s case he was convicted of doctoring the accounting books of CA to present a favorable financial picture so as to show his company exceeding quarterly earnings expectations to keep its stock price high. These bad-apple cases should in no way be considered as reflections of other accomplished Sri Lankan born American business / professional men and women – of Tamil, Muslim and Sinhalese backgrounds – who have immensely contributed through their diligent efforts to the US economy and the wider society. It is sad that, despite their enormous wealth, in both cases, greed seems to have taken over.
If dishonesty is the basis for one’s road map to the top, what’s the glory of being the wealthiest Sri Lankan on the planet? Robert Khuzami, Director of the SEC’s Division of Enforcement has said about the arrest: “What we have uncovered in the trading activities of Raj Rajaratnam is that the secret of his success is not genius trading strategies. He is not the astute study of company fundamentals or marketplace trends that he is widely thought to be. Raj Rajaratnam is not a master of the universe, but rather a master of the rolodex...”. Businessmen and business-women should persistently hold dear to the age old adage “make an honest living” by adhering to religious / spiritual fundamentals and refrain the temptation of easy money, especially when easy mega bucks are involved – which is guaranteed to lead to personal destruction. There's a lesson in these excesses for all of us.