Who is raj rajaratnam

Share This Article. Post was not sent - check your email addresses! Sorry, your blog cannot share posts by email. In , Raj Rajaratnam founded the Galleon Group, which would go on to become one of the largest hedge fund management firms in the world. He found success by investing primarily in healthcare and technology companies throughout the s and s. By the time he founded Galleon in , he had developed a savvy reputation for finding promising technology investments and being on the cutting edge.

But by the end of , Galleon closed its doors. Rajaratnam was the subject of an insider trading investigation by the U. In , he was arrested by the Federal Bureau of Investigation and charged with 14 counts of securities fraud and conspiracy.

Electronic records and wiretapped conversations exposed numerous communications he had with insiders at companies including Intel, Advanced Micro Devices, Clearwire, Google, Hilton, Akamai Technologies, and Goldman Sachs. Lawyers for Rajaratnam argued that all of his trading was based on publicly available information, including newspaper articles, analyst reports, and company news releases.

This was one deal for which prosecutors claimed Rajaratnam received insider information. The prosecution agreed that Galleon regularly performed legitimate research but argued that its employees often violated securities laws, as well. How can this decline in market efficiency happen? Experiments in behavioral finance show economic actors do not appreciate unequal and unfair behavior. When participants in an experiment see others in the experiment benefiting monetarily due to what is perceived as unfair behavior, these participants forsake profits to punish the other participant who behaves unfairly.

According to the current rational model of economics, this result cannot occur because the participant who is unfairly treated prefers to maximize profits, even if treated unfairly. However, unfairness offends human sensibilities and people may either punish those who treat them unfairly, or opt out of the game.

Thus, investors may stay out of the market if they see rampant insider trading. If enough investors stay out of the market and instead, say, buy government Bonds A type of debt investment in which an organization borrows money from investors with the agreement to pay back the money at a certain date with a certain interest rate.

Thus, the interest rate on the bond rises. In addition, the longer the bond Indeed insider trading has negative consequences for investors and markets. Analyzing the Rajaratnam case uncovers these negative consequences. Proponents of legalizing insider trading hold up the Rajaratnam trial as an example of the inefficacies of insider trading charges.

The four main arguments advanced in favor of legalizing insider trading do not stand up under scrutiny. Raj Rajaratnam did act unethically by trading shares of Goldman Sachs on September 23 and 24, , and demonstrated why insider trading ought to continue to be illegal.

John Boatright. John Wiley and Sons, , Years later, Rajaratnam convinced an old friend, Anil Kumar, to be his personal consultant. Rajaratnam used offshore accounts and shell companies to conceal the payments to Kumar. In , Kumar was consulting for Advanced Micro Devices, a microprocessor maker. Armed with this information, Rajaratnam was able to buy shares of ATI ahead of the acquisition.

Agents at the U. Securities and Exchange Commission received a tip that Galleon Group could be engaged in insider trading, so they launched an investigation. Federal agents combed through more than 10, documents, including instant messages IMs. Rajaratnam knew the SEC would monitor IMs, so he had always instructed his sources to only talk on the phone. Rajaratnam was subpoenaed and brought in for several hours of questioning.

She invited the agents in but denied involvement in insider trading until they showed her the IMs she sent to Rajaratnam. Afterward, Kahn agreed to become an FBI informant.

Kahn called Rajaratnam and tried to bait him, as FBI agents recorded conversation after conversation. In January , Rajaratnam made a few incriminating statements, which allowed agents to ask a judge for permission to tap his phone. Wiretapping is an aggressive tactic that has been rarely used in cases of white-collar crime. Attorney assigned to the Rajaratnam case.