Story of Raj Rajaratnam

Background and Career

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 theUniversity of Sussex in England. Rajaratnam earned anM.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 toForbes 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

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 . 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. His hedge fund is currently valued at $3.7 billion, down from its peak of $7 billion in 2008. After his arrest, Galleon has received requests from investors for withdrawal of $1.3 billion

Raj Rajaratnam was a major donor to the Obama for President campaign.

Arrest for insider trading

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.

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 Capitaltreasury 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.

Kosala Dissanayake

Advisor to Stock exchange

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