Raj Rajaratnam, hedge fund billionaire arrested for insider trading. But that’s just the start

He’s Tamil, from Sri Lanka. and gave the Tamil Rehabilitation Organization $3.5 million. Their assets were frozen in the US in Nov 2007 by Treasury after being judged a link to the Tamil Tigers.

The Feds apparently used techniques against him they typically use against organized crime and drug cartels, and this has Wall Streeters in a frenzy of panic. (Um, why haven’t the Feds always used such techniques?)

The insider trading was simple. They had informants everywhere who would leak them important insider knowledge that they would then trade upon. One informant was at Moody’s, there were many others.

Rajaratnam is a billionaire. The insider trading netted him $20 million over a number of years. He didn’t need the money. Sue is a Certified Fraud Examiner and says, ‘why do people worth $200 million try to steal a few million more. I don’t know why either, but it happens all the time.’

In this case the FBI arrested him at home and made him do the perp walk. There are a whole lot of nervous people on Wall Street now wondering if their phone calls were wiretapped too.

(An apology is in order. I’ve previously slammed Dubai for some of their financial practices. Hey, they aren’t doing anything Wall Street isn’t doing. We need to clean up our own back yard. Now.)

  • A black man from a foreign country Why am I not surprised.

    Pardon me if I wait ’till they walk the white-eyed preps before gassing up the balloons.

  • DJ

    A clarification: the TRO (Tamil Rehabilitation Organization) was undeniably affiliated with the LTTE. That’s because LTTE founded it, and used it to control development in the north and east of Sri Lanka. By this I mean they used TRO to ensure that aid work performed by a myriad of international agencies was consistent with long-term goals.

    What this meant in practice was that if you wanted to do aid work in the north and east, you coordinated with TRO or you didn’t do the work, period. On the upside, this prevented some of the more absurd aid projects from wasting their money and energy. It helped prevent proselytizing. And it allowed the LTTE to have a (significant) voice in where and how aid moneys were spent.

    Many of the Tamil people, especially in the Vanni, were and remain extremely poor. GOSL, being Sinhalese dominated (or more accurately, Sinhalese-elite domnated), has spent little on development in Tamil areas, even less than they’ve spent in poor and remote Sinhalese areas. Thus there was (and remains) a great need for aid and sustainable development in the north and east. As you know, I’m no apologist for the LTTE, but they did do a great deal to make aid more efficient and more fairly applied.

    After the tsunami, some western aid organizations working in government-held territory in the east used their funds to set up permanent office near the beach, sold supplies out the back of warehouses and trucks, and in general abused the aid moneys intended to help the hundreds of thousands of affected Sri Lankans. As you can imagine, this rarely happened in areas controlled by the LTTE and coordinated by TRO. The ramifications would have been too painful.

    However, the requirement for aid agencies to coordinate with TRO had consequences for agencies from nations (such as the U.S.) with a no-tolerance policy toward the LTTE. Work with TRO and you’re in trouble back home. Likewise, from time to time, the Government of Sri Lanka cracked down on those agencies trying to work in both GOSL and LTTE controlled territory on the basis that they were in coordination with the LTTE. Politics, all around.

    So Rajaratnam donated to the TRO. He was a Sri Lankan Tamil– who else would he donate to if he wanted to help his people? Christian World Vision? I think not.

    • Some Palestinian charities got deemed terrorist because while some of the money went for legit things, other money went elsewhere. Might be the same logic is being applied here too.

      I’m sure FBI may have pondered, was he laundering Tamil Tiger money through the hedge fund?

      Moody’s, already discredited, just got another major body blow because one of their employees was selling insider info for money.

      He was a big contributor to Democrats.

      This story could go all sorts of places.

Powered by WordPress. Designed by WooThemes