Raj Rajaratnam’s Insider Trading Scandal

Clark Langille

Ethics in Business and The Professions

Term/Research Paper

11/30/11

Raj Rajaratnam’s Insider Trading Scandal

Section One

Insider Trading:

On October 16th, 2009 the Federal Bureau of investigation arrested a man by the name of Raj Rajaratnam on allegations of insider trading. Raj Rajaratnam was a hedge fund manager and the founder of the Galleon Group, which was forced to close as a result of his conviction on May 11th, 2011. Raj Rajaratnam was accused of receiving information from several different accomplices from various companies and committing what is being called the largest Hedge fund insider trading case in history. He received his information from classmates of his from Wharton Business School up from the time that they all graduated in 1983. Two of his accomplices, Rajiv Goel and Roomy Khan, worked for Intel and have been convicted for providing Raj Rajaratnam with information that he used to purchase preferred stock from the company at opportune moments. He also received information from Robert Moffat, an IBM executive, and a Mckinsey & Company executive who’s name is Anil Kumar. Information has also surfaced that suggests that Raj Rajaratnam conspired with co founder of Galleon Group, Rajat Gupta, in order to receive information about Warren Buffet’s purchase of Goldman Sachs preferred stock through Buffet’s Berkshire Hathaway Incorporation. Both figures stood to profit off the information and the information was brought to trial. Raj Rajaratnam was convicted on all fourteen accounts of security fraud and conspiracy in May of 2011 and received an eleven-year sentencing for cooperating with prosecutors.

Several conflicts have arisen from this situation and Raj Rajaratnam’s various acts have affected more then just him. He was a public figure in Sri Lanka and at one point was named the wealthiest Sri Lankan native in history. Raj Rajaratnam gave a lot of money and provided a significant amount of help to various...