Raj Rajaratnam: Difference between revisions

Raj Rajaratnam is the founder of Galleon Group, a New York based hedge fund.^[1] On October 16, 2009 he was arrested by the FBI for insider trading.^[2] Jim Walden, an attorney for Mr. Rajaratnam, said his client is innocent and will fight the insider-trading charges.^[3]

He was born in Sri Lanka, attended S. Thomas' Preparatory School, Kollupitiya^[4], then moved to England to complete his schooling, and studied engineering at the University of Sussex in England. Rajaratnam earned an M.B.A. from Wharton School of the University of Pennsylvania in 1983. He is married with three children. Rajaratnam, a Tamil self-made billionaire hedge fund manager, is the 236th richest American according to Forbes magazine (2009).^[5] with an estimated net worth of $1.8 billion. He was ranked 262nd richest American in 2008^[6] and as of early 2009, is the richest Sri Lankan in the world. As of 2009, his $1.2 billion Diversified Fund has returned 22.3% according to an investor letter ^[7]

Rajaratnam started his career as a lending officer at the Chase Manhattan Bank where he made loans to high-tech companies. He joined the investment banking boutique Needham & Co. as an analyst in 1985, where his focus was on the electronics industry. He became the head of research in 1987 and the president in 1991, at the age of 34 ^[7]. At the company’s behest, he started a hedge fund, Needham Emerging Growth Partnership in March 1992, which he later bought and renamed ‘Galleon’.

Rajaratnam has been featured among the elite US money managers in a book called The New Investment Superstars: 13 Great Investors and their Strategies for Superior Returns by Lois Peltz. Initially invested in technology stocks and healthcare companies, he says his best ideas come from frequent visits with companies and conversations with executives who invest in his fund.[2] His hedge fund is currently valued at $3.7 billion, down from its peak of $7 billion in 2008^[7]. After his arrest, Galleon has received requests from investors for withdrawal of $1.3 billion ^[8]

Raj Rajaratnam donated 87,000$ to the Obama for President campaign.^{[9] [10]}

Rajaratnam has made more than $20 million in charitable donations in the last five years. In September 2009, Rajaratnam pledged to donate a million US dollars to help with the rehabilitation of LTTE combatants.^[11] He has donated generously to clear land mines in the war-affected areas in Sri Lanka. He recalled his visits to the mine-impacted areas of Sri Lanka and underscored the humanitarian toll that mines have taken. Recalling his encounter with a young child in Kilinochchi who had lost both legs to a landmine, Rajaratnam stated that this particular image that is etched in his memory “made it an easy decision to write the check.”^[12]. He helped Sri Lankans recover after the 2004 Tsunami.^[13].Mr. Rajaratnam was also a contributor to various causes that promoted development in the Indian subcontinent and programs that benefited lower income South Asian youth in the New York area.

According to the Federal Election Commission, Rajaratnam has made over $114,000 in political contributions in the past five years, mainly to Democratic causes, including 87,000$ to President Barack Obama's campaign. He has also donated to the Democratic National Committee, various campaigns on behalf of Hillary Rodham Clinton, Charles Schumer, and Robert Menendez.^[14][15]

He has also contributed $3.5 million to the Tamils Rehabilitation Organisation (TRO) which is allegedly a front group to the LTTE [3] and which was proscribed by the U.S.Treasury Department in 2007 as a Foreign Terrorist Organization. Adam Szubin, director of the Treasury's Office of Foreign Assets Control stated that the "TRO passed off its operation as charitable, when in fact it was raising money for designated terrorist group responsible for heinous acts of terrorism" [4]. TRO's offices were raided by the FBI in 2006 but was never charged with any wrong doing.[5]

The Sri Lankan government which has been condemned by international organizations including Amnesty International for violating human rights^[16] has stated that Mr Rajaratnam had sponsored a separatist organization called the Tamil Tigers that is allegedly involved in terrorist activities, for several years of the Sri Lankan Civil War with millions of US dollars and that he was under investigation in Sri Lanka[6].However, the senior Military official could not give specific details about how much Mr Rajaratnam had invested in the LTTE and how. The Sri Lankan government has had a cordial relationship with Mr Rajaratnam and recently accepted a pledge by him to donate a million dollars to help with the rehabilitation of former Tamil Tigers.^[17]

Mr. Walden his lawyer denied any involvement with the LTTE [7]

On Friday October 16, 2009, Raj Rajaratnam 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. 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 in 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.^[2][18]

Rajaratnam allegedly profited from information they got from Robert Moffat, an IBM senior vice president who allegedly provided data about a possible IBM merger with Sun Microsystems that led to a $1 million windfall for Rajaratnam's New Castle funds. Rajaratnam has also been accused of conspiring with Intel Capital treasury department managing director Rajiv Goel, and Anil Kumar, a director of McKinsey & Co. The alleged offenses took place over three years starting in January 2006.

The Sri Lankan stock market has fallen sharply after his arrest on insider trading charges. The Colombo Stock Exchange fell 3.9% before recovering to close down 1.6% on Monday, the biggest fall since June 4.

US prosecutors claim that Mr Rajaratnam and five other investors secured inside information regarding firms including Google, AMD, and Hilton Hotels.

The others charged in the case include Rajiv Goel, a director of strategic investments at Intel Capital; and Robert Moffat, senior vice president in the systems and technology division of computer group IBM.

• List of attacks attributed to the Sri Lankan military
• Allegations of State terrorism by Sri Lanka
• J. S. Tissainayagam
• List of Tamils of Sri Lanka
• List of St. Thomas' College alumni
• Insider trading
• Galleon scam

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