Raj Rajaratnam Charged with Insider Trading

America’s net top fraudster

Raj Rajaratnam insider trading scamIt’s been a good year for scammers — or a bad year, depending on how you look at it. From Bernie Madoff to Sky Capital, people who bilk others out of their money are getting caught. You can add Raj Rajaratnam to that list now, as he was arrested yesterday and charged with four counts of conspiracy and eight counts of securities fraud.

Of course, Raj Rajaratnam couldn’t do it alone; it takes more than one person to conspire. Six people, including ex-directors at a Bear Stearns Cos. hedge fund were charged in the scheme, which federal prosecutors said involved insider trading. While regular Americans are just trying to scrape by with installment loans for bad credit, Raj Rajaratnam and his alleged partners in crime are accused of conducting a $20 million scheme.

Who is Raj Rajaratnam?

Raj Rajaratnam is a billionaire and the founder of the Galleon Group hedge fund. He was born in Sri Lanka, but moved to the U.S. in 1981. He is now the 236th richest American, though I doubt that will be true anymore after his trial Bloomberg.com 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.

Federal prosecutors say Raj Rajaratnam and his co-conspirators conducted the biggest ever hedge fund insider trading scheme.

Raj Rajaratnam and friends

The  other people accused in the insider trading scheme are Rajiv Goel, of Intel Capital, Anil Kumar, who was a director at McKinsey & Co., IBM Corp. executive Robert Moffat, Bear Stearns Asset Management official Danielle Chiesi and Mark Kurland, also from Bear Stearns. Bloomoberg.com says:

It’s the first time wiretaps were used to target insider trading, and the arrests show a new level of prosecutorial aggressiveness towards Wall Street. 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.

In closing, I’ll leave you with the words of U.S. Attorney Preet Bharara, who wins the award for most obvious quote of the decade:

“Greed, sometimes, is not good.”