Galleon hedge-fund partner Raj Rajaratnam was escorted by FBI agents in New York Oct. 16 in what authorities are calling the largest insider-trading case against a hedge fund.
(Brendan McDermid/Reuters)Photos (1 of 1)
Raj Rajaratnam, arrested for insider trading, also linked to Sri Lanka case
Raj Rajaratnam, who was arrested Friday for insider trading in the US, is also linked to a money-transfer case in Sri Lanka.
By Laurent Belsie | Staff writer/ October 16, 2009 edition
and David Grant | Contributor
The world’s 559th wealthiest individual and hedge-fund owner, who was arrested in New York Friday for insider trading, is not just in trouble with US authorities. Raj Rajaratnam, founder of the Galleon Group, is also connected with an indictment against a Sri Lankan member of Parliament and two others, according to the Daily Mirror of Sri Lanka.
The MP and his two accomplices were indicted for depositing $3 million in a private Sri Lankan bank without informing the nation’s central bank, a violation of Sri Lanka’s banking rules. According to the indictment, $1 million of the funds came directly from Galleon on Dec. 22, 2006, and $2 million were deposited by Mr. Rajaratnam on Jan. 3, 2007. The funds were intended to purchase shares in the Union Bank of Sri Lanka, according to the Mirror.
Rajaratnam,, a Tamil born in Colombo, Sri Lanka, and widely regarded as a Wall Street wonder boy for perpetual returns over 10 percent, was not indicted in that case. The trial, scheduled to begin Sept. 25, has been postponed until February.
In the US case, federal investigators closed in on Rajaratnam through a series of wiretaps. Authorities say that the case against Rajaratnam and five codefendants is the largest ever against a hedge fund.
“He is not a master of the universe,” said Robert Khuzami, director of enforcement at the Securities and Exchange Commission, at a press conference Friday and reported by the New York Times’ DealBook blog. “He is a master of the Rolodex.” According to the indictment, Rajaratnam and his codefendants “routinely received inside information directly or indirectly from insiders and provided it to each other for the purpose of trading based on the information,” netting more than $20 million in illegal profits in 2006 and 2007.
Rajaratnam alone racked up more than $12.7 million in illegal profits for Galleon by trading on insider knowledge about companies including Hilton Hotels, Google, Akamai, and Advanced Micro Devices, according to the FBI.
While his wealth may seem astronomical, Rajaratnam is at the “lower” end of all-star fund managers in terms of income, banking “only” $200 million in 2008, for example, when some managers were hauling in over a billion.In Sri Lanka, Rajaratnam was known as a leading example of Tamils who left the country and prospered overseas. After the 2004 tsunami hit the coast, he set up a charity in the country and urged others to contribute funds for rebuilding. Last month, he put up $1 million to fund reintegration programs for Tamil Tiger fighters whose rebellion was crushed earlier this year.
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Comments
2. Kamal David | 10.16.09
In 2002, it was rumored that Interpol along with Scotland Yard have also been interviewing relatives of Mr Rajaratnam’s with regard to a number of smaller deposits randomly wired into suspect TRO/LTTE connected individual’s Bank Accounts in the UK and Canada. He may be “the” Diaspora funder of the now defunked Terrorist Organization.
5. Sie.Kathieravealu | 10.16.09
There seems to be something missing in this case. The person who RECEIVED the information has been arrested BUT nothing heard about the person or persons who GAVE the information. They too would have been benefited. So why the discrimination? Politics?
6. kajan | 10.16.09
please realice him .he is very good man,not like rajapakse family.this is a political revenge to tamil people.usa must help him and tamils freedom.
7. James | 10.16.09
It is about time. It was an open secret as to the manner in which RR was conducting his business. This action will give confidence to the investors that fair play will prevail, and people manipulating the system will be put behind bars.
8. Vili Mynthan | 10.17.09
In Sri Lanka, many members of the majority Sinhalese community has welcomed Rajaratnam’s arrest with glee. Raj may well have committed a crime, and I will not defend him. But his arrest has been used in the Sri Lankan media and commentators to yet again ‘prove’ that ‘This is how Tamils do well overseas’. I wish to alert CSM readers to the state of inherent racism in this country. How could two communities coexist in a country when such is the state of mind of many people?
9. Jayantha Tennekoon | 10.17.09
You must please publish the name of the MP and his accomplishes. We the public must know how to select our MPs at least during the next elections.
10. VANCITY BOY | 10.17.09
THIS IS A BIGER VICTORY THAN KILLING THE LTTE LEADER PRABAKHARAN FOR SRI LANKA. ALSO HE SHOULD BE PUNISHED IN SRI LANKA IN SRI LANKAN STYLE.
11. samuel | 10.17.09
Mrs. Clinton would have brought to the notice of international community stating that our arm forces was involved in rape during war against terrorism without keeping her own home in order, I think that she told all such stories to cover her mistakes or i irregularities obtaining fund from Mr. Raj Rajaratnam Sri Lankan origin American citizen for her election compaign against Mr. Obama. Now what is her reply for obtaining grant from a terrorist who supported LTTE.My openion is not only Raj Rajaratnam but also Mrs. Clinton should be arrested for interrogation for supporting a terrorist movement which fight against a elected government. She should be brought to the international court. Where is the international court which brought former yoguslavian president and that summoned present president of Sudan. International court rule does not apply for americans. or whether they can violate global rule against humanity.
12. tilak de silva | 10.17.09
This is a man who was the proxy shares and stocks purchaser for late Vellupillai Prabakharan. Majority of his money that he has invested is ill gooten money raised by LTTE dispora, his genorisity was a cover for his ulterior motives. His family was the most voiceferous supportres, fund raisers for late Prabakharan and KP. Majority of funds raised by LTTE diaspora was channelled through his organisations in US and Sri Lanka
13. Ranjith Wijetunge | 10.17.09
Not only is this guy was defrauding the market, he was one of the main financiers of a terrorist group called LTTE (Liberation Tamil Terrorists) in Sri Lanka. The LTTE is a designated Terrorist Organization is US, Canada and EU.
Even more alarming, he and his wife together with other wealthy Sri Lanka Tamils in US and Canada were involved in giveing millions to the election campaigns of Hillary Clinton (also her Senate campaign) Barak Obama and several Senators, for their support. He is also one of the big donors to Bill Clintons Global Initiative.
According to Brian Ross of ABC Rajaratnam is also a major trustee of the American India Foundation, which is a member of the Clinton Global Initiative. President Clinton has publicly thanked Rajaratnam and his wife for their multi-million dollar support.
Interestingly since the military defeat of the LTTE in May 2009, Rajaratnam and a group of wealthy Tamils have been regularly meeting Robert O Blake, the Assistant Secretary for South and Central Asian Affairs, on a regular basis. Three LTTE operatives were convicted in New York in May 2009, stemming from a FBI investigation for “attempt to purchase arms for LTTE and attempt to Bribe US State Department officials”
Read ABC’s Brian Ross at: http://abcnews.go.c
14. Dev de Silva | 10.17.09
Doesn’t the West get it? These people are terrorists. They are the ones who have been aiding and funding the Tiger terrorists in Sri Lanka for decades - and responsible for all the misery that befell on all Sri Lankans as a result - the Sinhalese, Tamils, Muslims and others - all alike. These terrorist supporters will not stop at this - they will continue to threaten and force the innocent Tamil population abroad to donate money to their defunct cause - and if they don’t, their families are harrassed. If the governments in the West and Australia don’t put their foot down on these criminal elements, the terrorism will raise its ugly head in Sri Lanka once again. Unless that’s what the West wants!
15. Balu | 10.18.09
Rajaratnam has shown that wealth of the magnitude of billions even millions cannot be made in honesty. To amass wealth , one has to be dishonest, he has proved it and lets hope the FBI will nail the many others who live in luxury and the poor honest citizens who borrowed money from the banks to own their homes are living in campsites.
Its about time democracy and a capitalist work up to the fraud that is being committed in financial circles
16. Kirk | 10.18.09
This arrest was predicted and called for by the movie “Stock Shock-The short selling of the American dream.” I had no idea how hedge funds could manipulate markets before I saw this DVD. I know people started sending their DVD’s of Stock shock into the SEC. But figures it is the FBI making the headline for arrest. Amazon has the DVD, I think.
17. Gerry | 10.19.09
I hope they go easy on this guy. The millions he stole is paltry compared to the billions that Madoff swindled.
18. suneth | 10.20.09
The LTTE was nothing but a street gang until it started to raise funds in London, Toronto and new york. If the west does not crack down on Tiger funds they will regret it some time soon. Terrorism is not about how many people feel good about themselves and thinking how much of a difference or sacrifice they are making about a cause. It is simply about how many people are killed. Blood still flows red though the skin colour may be black or white. while thousands of american and british servicemen have laid down their lives in Afganistan and Irak, the politicians are still counting how many votes and dollars they can get from terrorist supporters. terrorism is fuelled not only by hate, but also from racism and stupidity
19. Vance Freepath | 10.20.09
It seems that many have jumped to their conclusions about this hedge fund manager grouping him with other men of wealth and means who have been indicted or convicted. There is a court system in America where one is innocent until porven guilty. It has also cone to my attention that Tamils who had to flee Sri Lanka beginning with the racist pogroms after the departure of the British and up until recently during the infamous bombing of civilian refugee camps by the government of Sri Lanka, and the concentration/internment camps where brutality is committed are being painted by the majority Singalese as terrorists. These persecutors acting both on their own and under the direction of the government of Sri Lanka who is run by men who have been known to have robbed millions from that country’s treasury are gleeful to report such news is a skewed slant to garner more support both at home and abroad. It seems there is nothing more loathsome to these leaders of a nation who has been in the international spotlight for human rights violations and egregious abuses that a succesful Tamil. The Rajapakse brothers are under scrutiny in the UN and worldwide where war crimes and human rights abuse cases are being considered against them. Let’s focus on the issue here, a wealthy man is accused of white collar crime and has yet to defend himself in court. The comments here would have one beleive that he is a terrorist as are all Tamils. Keep that racist propaganda where it belongs, in the backwards and corrupt halls of Sri Lankan parliament and in the torture chambers of the internment camps of Sri Lanka.
20. Nathan | 10.28.09
Well written.I am a Tamil from South Africa,I am No Terrorist. This goes against all humanity and really shows that Sri Lanka is 200 years behind the rest of the world. I lived thru racism in South Africa but in the end thru Nelson Mandela we won our freedom…Love you neighbour even though he has wants to knife you…
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1. Twitter Trackbacks for Raj Rajaratnam, arrested for insider trading, also linked to Sri Lanka case | csmonitor.com [csmonitor.com] on Topsy.com | 10.16.09
2. Raj Rajaratnam, arrested for insider trading, also linked to Sri Lanka case (The Christian Science Monitor) - Newsalistic | 10.16.09
3. Richest Sri Lankan in World arrested in first wiretapped terrorism investigation turned largest insider trading scam ever « Talking Under Random Dribble | 10.20.09
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1. Jonathan Keelle | 10.16.09
This is the 40th Tamil from Sri Lanka to face some form of charges outside the island. 2009 has seen 40 Sri Lankans arrested globally on charges of fraud, terrorism, rape and murder. ALL have been Tamils. Not trying to be stereotypical or racist, but that’s not the view we have of Tamils right? We see them as victims and persecuted, but in reality most Tamils who live outside Sri Lanka got to developed countries as refugees, instead of the nearest port of call, India, because of the Tamil Tigers and their own extremist views in support of a terror group. Many lied to immigration about Sri Lankan government abuses to get in to a developed country as a refugee. Whether you like it or not, that’s fact.
Just an example of the deceit and misinformation: http://bailaman.blogspot.com/2009/10/what-are-you-smoking-brad-adams-human.html