//
you're reading...
Politics, Congress, Investigation, Republicans, FBI, internet, health, Economy, Education, Wikipedia, local news, Press Release, Justice Department, Democrats, meta, Fraud, National News, Environment

PRESS RELEASE: Manhattan U.S. Attorney and FBI Assistant Director in Charge Announce Insider Trading Charges Against Former Galleon Portfolio Manager Rengan Rajaratnam

U.S. Attorney’s Office
March 21, 2013

Southern District of New York
(212) 637-2600

Manhattan U.S. Attorney and FBI Assistant Director in Charge Announce Insider Trading Charges Against Former Galleon Portfolio Manager Rengan Rajaratnam
Defendant Allegedly Traded on Inside Information Relating to Technology Stocks in 2008

Preet Bharara, the United States Attorney for the Southern District of New York, and George Venizelos, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (FBI), today announced conspiracy and securities fraud charges against Rajarengan Rajaratnam (Rengan Rajaratnam), a former portfolio manager at the hedge fund management firm Galleon Group, for his alleged involvement in an insider trading scheme. Rengan Rajaratnam allegedly conspired with his brother, Galleon founder Raj Rajaratnam, to trade on the basis of material, non-public information (“inside information”) concerning Clearwire Corp. (“Clearwire”) and Advanced Micro Devices Inc. (“AMD”) in 2008, earning nearly $1.2 million in profits in the aggregate. v Rajaratnam has not yet been arrested on these charges.

Manhattan U.S. Attorney Preet Bharara said, “As alleged, Rengan Rajaratnam and his brother shared more than DNA; they also shared a penchant for insider trading. Along with his brother Raj, Rengan Rajaratnam was allegedly at the heart of an insider trading scheme that swept up an unprecedented number of people in its web of corruption, and with his indictment, we are one step closer to closing that chapter.”

FBI Assistant Director in Charge George Venizelos said, “Rengan Rajaratnam’s career arc paralleled his brother’s. He followed in Raj’s footsteps by obtaining an MBA from a top- flight business school. He went to work for Raj at Galleon. As alleged in the indictment, Rengan also engaged in the same illegal conduct as Raj. He reaped the benefit of insider information obtained by Raj, and he planned to reciprocate by cultivating his own source of inside information. Now Rengan’s career arc has descended to the same place his brother’s did less than four years ago: defendant.”

In a separate action, the U.S. Securities and Exchange Commission (SEC) announced civil charges against Rengan Rajaratnam.

The following allegations are based on the indictment filed yesterday and unsealed today in Manhattan federal court and other court documents:

The inside information concerning Clearwire originated from Rajiv Goel, an employee of Intel Corp. (“Intel”). In March 2008, Goel provided inside information to his friend Raj Rajaratnam concerning a significant transaction in which Intel would invest approximately $1 billion in Clearwire in exchange for a 10 percent equity position. Raj Rajaratnam, in turn, shared the inside information with his brother, Rengan Rajaratnam. Rengan Rajaratnam and Raj Rajaratnam used this inside information to buy Clearwire stock on March 24 and 25, 2008.

After the U.S. stock markets closed on March 25, 2008, a major news organization published an article describing, in part, the proposed Clearwire transaction. Shortly afterward, Rajaratnam called his brother to alert him to the news report. In that call, Rajaratnam said, “We’re f—d, man,” because the “Clearwire stuff…just hit” the newspaper. Rengan Rajaratnam explained that the news article was “short on details…they don’t have any of the equity split. But they named…Comcast, they named Time Warner, Clearwire, Sprint.” Raj Rajaratnam replied, “O.K., s—t.” Rajaratnam then said, “So, I don’t know how much you got in today,” referring to Raj Rajaratnam’s purchases of Clearwire stock that day, “but I think [Clearwire’s share price] is gonna rip [rise sharply] tomorrow.” In fact, Clearwire’s share price did rise sharply the following day in response to the news article, after which Rengan Rajaratnam and Raj Rajaratnam made nearly $1.2 million in profits from the inside information concerning Clearwire.

The inside information concerning AMD originated from Anil Kumar, who was, at the time, a partner of McKinsey & Co. (“McKinsey”), the global management consulting firm. In 2008, AMD hired McKinsey to advise it in relation to a strategic transaction in which AMD would spin off its manufacturing business into a new entity and the investment authority of Abu Dhabi would invest in the new entity and in AMD itself. On August 15, 2008, Kumar advised Raj Rajaratnam that AMD and the Abu Dhabi investment authority had “shaken hands and said that they’re going ahead with the deal.” Three hours later, Raj Rajaratnam told Rengan Rajaratnam, “I just heard that…AMD had a handshake with the…Arabs….The Arabs to put [in] six billion dollars.” He also told his brother that he had bought AMD shares based on Kumar’s inside information about AMD, and that he was “buying two fifty”—meaning 250,000 shares of AMD—“for you, OK?” Rengan Rajaratnam replied, “Alright, thanks a lot man, I appreciate it.” On August 15, 2008, Raj Rajaratnam bought three million shares of AMD for a Galleon hedge fund that he managed and 250,000 shares of AMD for a Galleon hedge fund that Rajaratnam managed.

Later that day, Rengan Rajaratnam and Raj Rajaratnam spoke again about the AMD inside information and also about the affirmative efforts that Rajaratnam was making to cultivate another McKinsey partner (“McKinsey Partner A”) as a source of inside information. Specifically, Rengan Rajaratnam advised Raj Rajaratnam that he had just finished a meeting with McKinsey Partner A in which McKinsey Partner A “spilled his beans” and “volunteered the information about the investments” in AMD. Raj Rajaratnam said, “[W]hat we wanna do is…get him and then have access to, you know, be able to chat with him” about

other inside information. Raj Rajaratnam said to Rengan Rajaratnam, “[H]e is a little dirty, right?” Rajaratnam responded, “[H]e’s a little dirty.” Rajaratnam said that when he had asked McKinsey Partner A what other stocks McKinsey Partner A liked, McKinsey Partner A said, “‘You know, the problem is all my best ideas…are inside information.’”

* * *

Rajaratnam, 42, of New York, New York, has been charged with one count of conspiracy to commit securities fraud and six counts of securities fraud. Count one, the conspiracy charge, carries a maximum potential penalty of five years in prison and a fine of $250,000 or twice the gross gain or loss from the offense. Counts two through seven, the securities fraud charges, each carry a maximum potential penalty of 20 years in prison and a maximum fine of $5 million.

Raj Rajaratnam was found guilty of conspiracy and securities fraud charges in 2011 and is currently serving an 11-year prison sentence. Rajiv Goel and Anil Kumar both pled guilty pursuant to cooperation agreements and were sentenced to two years of probation in 2012.

Mr. Bharara praised the investigative work of the FBI. He also thanked the SEC. Mr. Bharara noted that the investigation is continuing.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a co-chair of the Securities and Commodities Fraud Working Group. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney David B. Massey is in charge of the prosecution.

The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

Advertisements

About FREDERICA CADE

Most of the information you will see comes from some Federal/state Government documents or Federal/State Governm Agency. -----------------------------------------------The fellow that can only see a week ahead is always the popular fellow, for he is looking with the crowd. But the one that can see years ahead, he has a telescope but he can't make anybody believe that he has it. ~~~~Will Rogers __The woman who follows the crowd will usually go no further than the crowd. The woman who walks alone is likely to find herself in places no one has ever been before.~ Albert Einstein ~"I never work better than when I am inspired by anger; for when I am angry, I can write, pray, and preach well, for then my whole temperament is quickened, my understandingsharpen​ed, and all mundane vexations and temptations depart.” ~Dr. Martin Luther King Jr. _________________________________________________________________________________________ ~"The bosom of America is open to receive not only the Opulent and respectable Stranger, but the oppressed and persecuted of all Nations and Religions; whom we shall welcome to a participation of all our rights and privileges, if by decency and propriety of conduct they appear to merit the enjoyment".~___________________________________ George Washington, Address to the Members of the Volunteer Association of Ireland, December 2, 1783 Fredericacade@gmail.com

Discussion

No comments yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Frederica Cade’s Blog (Politics, News, Analysis, Investigation, Press Releases, Education, Economics, Internet, News Releases, Featured stories, Fraud, and History, U.S. Laws, Posted stories, Index of reports, meta,Home page)

Blog Stats #

  • 922,174 hits

Frederica Cade’s Archives

Recent Post

March 2013
M T W T F S S
« Feb   Apr »
 123
45678910
11121314151617
18192021222324
25262728293031

Frederica Cade’s Blog (Politics, News, Analysis, Investigation, Press Releases, Education, Economics, Internet, News Releases, Featured stories, Fraud, and History, U.S. Laws, Posted stories, Index of reports, meta,Home page)

Politics, local News, National News, Foreign news, Congress, President, Government, Economics, Analysis, Art, Health,Investigation, FBI, Justice Department, Fraud, Press Releases, Health Care, News Releases, Law, and History Tags

2012 Elections Affordable Care Act Alabama Albuquerque ALEC Alexandria American Legislative Exchange Council AMERICAN LEGISLATIVE EXCHANGE COUNCIL (ALEC) Analysis Arizona Atlanta Attorney General Eric Holder California charter schools Chicago Congress Connecticut Democrats Deputy Attorney General James M. Cole Donald Trump Economics Economy Education Environ Environme Environmen Environment EPA FBI Federal Election Commission (FEC) Florida fraud FreedomWorks General Georgia Governor Nikki Haley Grover Norquist Hammond Health Health Care Heritage Foundation HHS Secretary Kathleen Sebelius Hillary Clinton History https://fredericacade.wordpress.com https://fredericacade.wordpress.com/wp-admin/edit.php?category_name=politics-congress-investigation-republicans-fbi-internet-health-economy-education-wikipedia-local-news-press-release-justice-departm Idaho Illinois Inc. Indiana Internet Investigation Iowa IRS jobs Jr. Justice Department Kansas Kara Pally Keystone XL Knoxville Koch Koch Brothers Koch Industries Laws local news Louisiana Maryland Massachusetts Matte Kibbe Memphis meta Miami Michigan Minnesota Mississippi Missouri Mitt Romney Montana Nashville National News Nebraska New Jersey New Mexico News New York Nikki Haley North Carolina Ohio Oklahoma Oregon outsourcing Paul Ryan Pennsylvania Philadelphia Politics President President Obama Press Release Public Schools Puerto Rico record Republicans Rhode Island South Carolina South Dakota Sr. Tennessee Texas Top Story TransCanada Vincent Sheheen Virginia Voting Rights Act Voting Rights Act of 1965 WASHINGTON Washington D.C. West Virginia Wikipedia Wisconsin

Frederica Cade’s Blog (Politics, News, Analysis, Investigation, Press Releases, Education, Economics, Internet, News Releases, Featured stories, Fraud, and History, U.S. Laws, Posted stories, Index of reports, meta,Home page)

Follow me on Twitter

Frederica Cade’s Blog (Politics, News, Analysis, Investigation, Press Releases, Education, Economics, Internet, News Releases, Featured stories, Fraud, and History, U.S. Laws, Posted stories, Index of reports, meta,Home page)

Advertisements