Raj Rajaratnam
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Rajakumaran Rajaratnam (born June 15, 1957) is a Sri Lankan-American former
hedge fund A hedge fund is a Pooling (resource management), pooled investment fund that holds Market liquidity, liquid assets and that makes use of complex trader (finance), trading and risk management techniques to aim to improve investment performance and ...
manager and founder of the
Galleon Group The Galleon Group was one of the largest hedge fund management firms in the world, managing over $7 billion, before closing in October 2009. The firm was the epicenter of a 2009 insider trading scandal which subsequently led to its fall. The fir ...
, a
New York New York most commonly refers to: * New York (state), a state in the northeastern United States * New York City, the most populous city in the United States, located in the state of New York New York may also refer to: Places United Kingdom * ...
-based hedge fund management firm. He is also the author of his memoir, '' Uneven Justice: The Plot to Sink Galleon.'' In 2008, Rajaratnam was listed as the 262nd richest man in the United States, according to the latest Forbes list of the 400 Richest Americans. On October 16, 2009, he was arrested by the
FBI The Federal Bureau of Investigation (FBI) is the domestic Intelligence agency, intelligence and Security agency, security service of the United States and Federal law enforcement in the United States, its principal federal law enforcement ag ...
for
insider trading Insider trading is the trading of a public company's stock or other securities (such as bonds or stock options) based on material, nonpublic information about the company. In various countries, some kinds of trading based on insider informati ...
, which also caused the Galleon Group to fold. He stood trial in ''U.S. v. Rajaratnam'' (09 Cr. 01184) in the
United States District Court for the Southern District of New York The United States District Court for the Southern District of New York (in case citations, S.D.N.Y.) is a federal trial court whose geographic jurisdiction encompasses eight counties of the State of New York. Two of these are in New York Ci ...
, and on May 11, 2011, was found guilty on all 14 counts of conspiracy and securities fraud. On October 13, 2011, Rajaratnam was sentenced to 11 years in prison and fined a criminal and civil penalty of over $150 million combined. Rajaratnam was incarcerated at Federal Medical Center, Devens in
Ayer, Massachusetts Ayer ( ) is a New England town, town in Middlesex County, Massachusetts, United States. Originally part of Groton, Massachusetts, Groton, it was incorporated February 14, 1871, and became a major commercial railroad junction. The town was home t ...
, an administrative facility housing male offenders requiring specialized or long-term medical or mental health care. Rajaratnam was released to home confinement in his Upper East Side Manhattan apartment, located on Sutton Place, in the summer of 2019. Rajaratnam being released after 7 1/2 years, published his memoir, ''Uneven Justice'', detailing the events surrounding his insider trading conviction and the alleged prosecutorial overreach he claims took place.


Early life

Rajaratnam is an ethnic
Sri Lankan Tamil Sri Lankan Tamils ( or ), also known as Ceylon Tamils or Eelam Tamils, are Tamils native to the South Asian island state of Sri Lanka. Today, they constitute a majority in the Northern Province, form the plurality in the Eastern Province a ...
born in
Colombo Colombo, ( ; , ; , ), is the executive and judicial capital and largest city of Sri Lanka by population. The Colombo metropolitan area is estimated to have a population of 5.6 million, and 752,993 within the municipal limits. It is the ...
in what was then the
Dominion of Ceylon Ceylons:Sri Lanka Independence Act 1947, The Sri Lanka Independence Act 1947 uses the name "Ceylon" for the new dominion; nowhere does that Act use the term "Dominion of Ceylon", which although sometimes used was not the official name. was an ...
(present-day Sri Lanka) to J. M. Rajaratnam, who was the chairman & CEO of the Singer Sewing Machine Co. Sri Lanka in 1970 and the vice president in South Asia. Mehta, Suketu
"The Outsider: In an exclusive interview, Raj Rajaratnam reveals ..."
''
The Daily Beast ''The Daily Beast'' is an American news website focused on politics, media, and pop culture. Founded in 2008, the website is owned by IAC Inc. It has been characterized as a "high-end tabloid" by Noah Shachtman, the site's editor-in-chief ...
'', October 23, 2011; retrieved 2011-10-26.
and mother Rajeshwari, a homemaker. He attended S. Thomas' Preparatory School, Kollupitiya before his family migrated to England in 1971. He attended
Dulwich College Dulwich College is a 2-18 private, day and boarding school for boys in Dulwich, London, England. As a public school, it began as the College of God's Gift, founded in 1619 by Elizabethan actor Edward Alleyn, with the original purpose of ...
in London and later studied engineering at the
University of Sussex The University of Sussex is a public university, public research university, research university located in Falmer, East Sussex, England. It lies mostly within the city boundaries of Brighton and Hove. Its large campus site is surrounded by the ...
, and then earned an
M.B.A. A Master of Business Administration (MBA) is a professional degree focused on business administration. The core courses in an MBA program cover various areas of business administration; elective courses may allow further study in a particular a ...
from the
Wharton School of the University of Pennsylvania The Wharton School ( ) is the business school of the University of Pennsylvania, a private Ivy League research university in Philadelphia. Established in 1881 through a donation from Joseph Wharton, a co-founder of Bethlehem Steel, the Wharton ...
in 1983.


Career

Rajaratnam started his career as a lending officer at
Chase Manhattan Bank JPMorgan Chase Bank, N.A., doing business as Chase, is an American national bank headquartered in New York City that constitutes the consumer and commercial banking subsidiary of the U.S. multinational banking and financial services holding ...
where he specialized in business loans to technology companies. He joined the investment banking boutique Needham & Co. as an equity research analyst in 1985, where he focused on the consumer electronics and Technology sector. He rapidly rose through the ranks, becoming 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 A hedge fund is a Pooling (resource management), pooled investment fund that holds Market liquidity, liquid assets and that makes use of complex trader (finance), trading and risk management techniques to aim to improve investment performance and ...
—the Needham Emerging Growth Partnership—in March 1992, which he later bought and renamed ''
Galleon Group The Galleon Group was one of the largest hedge fund management firms in the world, managing over $7 billion, before closing in October 2009. The firm was the epicenter of a 2009 insider trading scandal which subsequently led to its fall. The fir ...
''. His hedge fund was valued at $3.7 billion in 2009, down from a peak of $7 billion in 2008. According to a 2009 investor letter his $1.2 billion Diversified Fund had a net annualized return of 22.3 percent. Rajaratnam has been featured among the elite US money managers in a book called ''The New Investment Superstars.'' Initially, he primarily invested in technology and healthcare companies. He said that his best ideas came from frequent visits with the companies in which he invested and from conversations with executives who invested in his fund. After Rajaratnam's arrest, Galleon received requests from its investors for the withdrawal of $1.3 billion, which caused the fund to close. In a letter dated October 21, 2009, Rajaratnam informed his employees and investors that he intended to wind down all the funds of the Galleon Group. Investors received the full balance of their initial investments, plus profits, in January 2010.


Conviction and imprisonment for insider trading

:''Additional context at Raj Rajaratnam, Galleon Group, Anil Kumar, and Rajat Gupta insider trading cases'' On Friday October 16, 2009, Raj Rajaratnam was arrested by the
FBI The Federal Bureau of Investigation (FBI) is the domestic Intelligence agency, intelligence and Security agency, security service of the United States and Federal law enforcement in the United States, its principal federal law enforcement ag ...
for
insider trading Insider trading is the trading of a public company's stock or other securities (such as bonds or stock options) based on material, nonpublic information about the company. In various countries, some kinds of trading based on insider informati ...
in the stock of several publicly traded companies. U.S. Attorney
Preet Bharara Preetinder Singh Bharara (; born October 13, 1968) is an Indian American lawyer and former federal prosecutor who served as the United States Attorney for the Southern District of New York from 2009 to 2017. As of 2025, he is a partner at the ...
put the total profits in the scheme at over $60 million, telling a news conference that it was the largest hedge fund insider trading case in United States history. Jim Walden, an attorney for Rajaratnam, said his client is innocent and would fight the insider-trading charges. Rajaratnam was accused of profiting from information received from the individuals listed below: * Robert Moffat, a senior executive of
IBM International Business Machines Corporation (using the trademark IBM), nicknamed Big Blue, is an American Multinational corporation, multinational technology company headquartered in Armonk, New York, and present in over 175 countries. It is ...
, considered next in line to be CEO. * Anil Kumar, a senior executive of
McKinsey & Company McKinsey & Company (informally McKinsey or McK) is an American multinational strategy and management consulting firm that offers professional services to corporations, governments, and other organizations. Founded in 1926 by James O. McKinse ...
, and close friend of
Rajat Gupta Rajat Kumar Gupta (; born ) is an Indian-American business executive who, as CEO, was the first foreign-born managing director of management consultancy firm McKinsey & Company from 1994 to 2003. In 2012, he was convicted of insider trading and ...
(its former managing director) who was later also convicted of passing information to Rajaratnam. * Rajiv Goel, a midlevel
Intel Intel Corporation is an American multinational corporation and technology company headquartered in Santa Clara, California, and Delaware General Corporation Law, incorporated in Delaware. Intel designs, manufactures, and sells computer compo ...
Capital executive. * Roomy Khan, previously convicted of wire fraud for providing inside information from her employer, Intel, to Rajaratnam. It was reported that Rajaratnam, Goel, and Kumar were all part of the class of 1983 from Wharton business school. The Sri Lankan stock market fell sharply after Rajaratnam was arrested on insider trading charges in October 2009. Sri Lanka's Securities and Exchange Commission is reviewing the active stock trading of Raj Rajaratnam with a view of identifying any insider trading. Rajaratnam was also accused of conspiring to obtain confidential information on the $5 billion purchase by
Warren Buffett Warren Edward Buffett ( ; born August 30, 1930) is an American investor and philanthropist who currently serves as the chairman and CEO of the conglomerate holding company Berkshire Hathaway. As a result of his investment success, Buffett is ...
's
Berkshire Hathaway Berkshire Hathaway Inc. () is an American multinational conglomerate holding company headquartered in Omaha, Nebraska. Originally a textile manufacturer, the company transitioned into a conglomerate starting in 1965 under the management of c ...
of
Goldman Sachs The Goldman Sachs Group, Inc. ( ) is an American multinational investment bank and financial services company. Founded in 1869, Goldman Sachs is headquartered in Lower Manhattan in New York City, with regional headquarters in many internationa ...
preferred stock prior to the September 2008 public announcement of that transaction. The ''Wall Street Journal'' reported that a former member of the board of directors of Goldman Sachs and former
McKinsey & Company McKinsey & Company (informally McKinsey or McK) is an American multinational strategy and management consulting firm that offers professional services to corporations, governments, and other organizations. Founded in 1926 by James O. McKinse ...
chief executive Rajat Gupta told Rajaratnam about Berkshire's investment before it became public. Gupta stood to profit as would-be chairman of Galleon International, a co-founder of New Silk Route with Rajaratnam, and as a friend of Rajaratnam. In March 2011 Gupta was charged in an administrative proceeding by the SEC. Gupta maintained his innocence, counter-sued, and won dismissal of the administrative charge, but was then arrested on criminal charges. ::Three days before Gupta's arrest, Rajaratnam was reported to have said that the prosecutors had wanted him to wear a wire and tape his conversations with Gupta. "It was Rajaratnam’s understanding that were he to plead guilty and wear a wire, he might be offered a sentence of as little as five years. With good behavior, he could be out in 85 percent of that time," the report continued. Rajaratnam did not — and has not ever, cooperated with federal prosecutors. On May 11, 2011, Rajaratnam was found guilty on all 14 counts of conspiracy and securities fraud. On October 13, 2011, Rajaratnam was sentenced to 11 years in prison by Judge Richard Holwell. To date, this was the longest prison sentence ever handed out for insider trading. The thirteen other defendants connected to Rajaratnam's case received prison sentences averaging approximately three years each. Rajaratnam served the first years of his 11-year sentence in Ayer, Massachusetts. His appeal to the
United States Court of Appeals for the Second Circuit The United States Court of Appeals for the Second Circuit (in case citations, 2d Cir.) is one of the thirteen United States Courts of Appeals. Its territory covers the states of Connecticut, New York (state), New York, and Vermont, and it has ap ...
was argued in October 2012 by
Patricia Millett Patricia Ann Millett (; born September 1963) is an American lawyer and jurist serving as a United States circuit judge of the United States Court of Appeals for the District of Columbia Circuit. She formerly headed the Supreme Court practice at ...
, who subsequently became a federal Court of Appeals judge herself on the
United States Court of Appeals for the District of Columbia Circuit The United States Court of Appeals for the District of Columbia Circuit (in case citations, D.C. Cir.) is one of the thirteen United States Courts of Appeals. It has the smallest geographical jurisdiction of any of the U.S. courts of appeals, ...
on December 10, 2013. U.S. District Judge Loretta Preska in Manhattan on March 3, 2017, rejected Rajaratnam's bid to void much of his insider trading conviction and shorten his 11-year prison sentence, on account of Rajaratnam failing to show his actual innocence on five of the 14 counts on which he was convicted, or that two other counts should be vacated because the main government witness committed perjury. Preska also "rejected Rajaratnam's argument that his trial counsel was ineffective, and denied Rajaratnam's bid to reduce the $53.8 million that he had agreed to forfeit to about $4.3 million."


Contributions to charitable and political organizations

Rajaratnam alongside other private donors, partnered with the US State Department to fund mine detection dogs for humanitarian demining war-affected areas in Sri Lanka. Rajaratnam was in Sri Lanka when the 2004 Asian Tsunami hit and donated $5 million to for the construction of 400 new homes for the island's various ethnic groups - Sinhalese and Tamils. The Sri Lankan justice ministry has acknowledged and thanked Rajaratnam for the millions of dollars contributed to rehabilitating child soldiers conscripted by the
Liberation Tigers of Tamil Eelam The Liberation Tigers of Tamil Eelam (LTTE; , ; also known as the Tamil Tigers) was a Tamil militant organization, that was based in the northern and eastern Sri Lanka. The LTTE fought to create an independent Tamil state called Tamil Eela ...
(LTTE). Rajaratnam had pledged a $1 million to rehabilitate former LTTE combatants. According to the
Federal Election Commission The Federal Election Commission (FEC) is an independent agency of the United States government that enforces U.S. campaign finance laws and oversees U.S. federal elections. Created in 1974 through amendments to the Federal Election Campaign ...
, Rajaratnam has made over $118,000 in political contributions in five years. He contributed to the
Democratic National Committee The Democratic National Committee (DNC) is the principal executive leadership board of the United States's Democratic Party (United States), Democratic Party. According to the party charter, it has "general responsibility for the affairs of the ...
and various campaigns on behalf of
Barack Obama Barack Hussein Obama II (born August 4, 1961) is an American politician who was the 44th president of the United States from 2009 to 2017. A member of the Democratic Party, he was the first African American president in American history. O ...
,
Hillary Clinton Hillary Diane Rodham Clinton ( Rodham; born October 26, 1947) is an American politician, lawyer and diplomat. She was the 67th United States secretary of state in the administration of Barack Obama from 2009 to 2013, a U.S. senator represent ...
,
Chuck Schumer Charles Ellis Schumer ( ; born November 23, 1950) is an American politician serving as the Seniority in the United States Senate, senior United States Senate, United States senator from New York (state), New York, a seat he has held since 1999. ...
, and
Bob Menendez Robert Menendez (; born January 1, 1954) is an American former politician and lawyer who represented New Jersey in the United States Senate from 2006 until his resignation in 2024. A member of the Democratic Party (United States), Democratic ...
.


Post-prison activities

Rajaratnam served seven and a half years of an 11-year sentence in prison and was released in the summer of 2019. In December 2021, he published his memoir '' Uneven Justice'' detailing the events surrounding his conviction and his criticisms of the US
criminal justice Criminal justice is the delivery of justice to those who have been accused of committing crimes. The criminal justice system is a series of government agencies and institutions. Goals include the rehabilitation of offenders, preventing other ...
system. Talking to Andrew Ross Sorkin of Squawk Box on CNBC TV Rajaratnam highlights and explains the details of strategies employed to achieve his conviction.


See also

* '' SEC v. Rajaratnam'' *
Chip Skowron use both this parameter and , birth_date to display the person's date of birth, date of death, and age at death) --> , death_place = , death_cause = , body_discovered = , resting_place = , resting_place_coordinates ...
, hedge fund portfolio manager convicted of insider trading * Mathew Martoma, hedge fund trader and portfolio manager convicted of insider trading


References

{{DEFAULTSORT:Rajaratnam, Raj Sri Lankan emigrants to the United States Tamil businesspeople 1957 births Living people Alumni of the University of Sussex American billionaires American financiers American people of Sri Lankan Tamil descent American people convicted of fraud Financial scandals American hedge fund managers People educated at Dulwich College Alumni of S. Thomas' College, Mount Lavinia People convicted of insider trading American prisoners and detainees Prisoners and detainees of the United States federal government Sri Lankan Tamil people Sri Lankan businesspeople Wharton School alumni Alumni of S. Thomas' Preparatory School, Kollupitiya Tamil billionaires