A billionaire hedge fund manager and a well-known philanthropist in New York City’s South Asian community was one of six hedge fund managers and corporate executives arrested Friday in an insider trading case that prosecutors say reaped more than $20 million in illegal profits.
Raj Rajaratnam (pictured), a partner in Galleon Management and a portfolio manager for Galleon Group, a Madison Avenue hedge fund that managed around $7 billion, was accused of conspiring with others to trade based on insider information about several publicly traded companies, including Google. Rajaratnam was ranked number 559 by Forbes magazine this year as one of the world’s wealthiest men. His net worth was estimated to be $1.3 billion.
Southern District U.S. Attorney said it was the largest hedge fund case ever prosecuted and marked the first use of court-authorized wiretaps to capture conversations by suspects in an insider trading case.
Robert Khuzami, director of enforcement at the Securities and Exchange Commission, said at a press conference that the charges show Mr. Rajaratnam’s “secret of success was not genius trading strategies.”
“He is not the master of the universe. He is a master of the Rolodex,” Mr. Khuzami said.
Born in Sri Lanka and a graduate of University of Pennsylvania’s Wharton School of Business, Mr. Rajaratnam has been described as a savvy manager of billions of dollars in technology and health-care hedge funds at Galleon, which he started in 1996. His wife is the chair of South Asian Youth Action, a community organization based in Elmhurst, Queens.