News & Politics

Raj Rajaratnam Faces More Charges in Galleon Scandal; Wharton B-School Alums Are Dropping Like Flies


With even more criminal charges now piled up against beleaguered hedge-fund wheeler-dealer Raj Rajaratnam, let’s go back to last October, when the Galleon insider-trading scandal broke.

Who else to size up Rajaratnam at that moment but Nassim Nicholas Taleb — author of The Black Swan and one of the world’s most influential thinkers, some say. Why Taleb? They were classmates in the ’80s at the Wharton business school, which keeps taking big hits of bad publicity whenever one of its grads pleads guilty in the Galleon scheme.

Taleb, an acknowledged expert on the intricacies and philosophy of high finance, was almost immediately interviewed after the scandal broke, and he was no doubt correct in remembering Rajaratnam as “chubby” and likeable. However, he also recalled Rajaratnam as not particularly fixated on getting rich.

On purpose or not, Rajaratnam became the (reputedly) richest Sri Lankan-born person in the world and is accused of being the kingpin of one of the biggest insider-trading scandals ever.

Rajaratnam and Taleb weren’t apparently the closest of pals. But Rajiv Goel, later an Intel exec, was a good buddy of Rajaratnam’s at Wharton. And so was Anil Kumar, a senior partner and global-consulting giant McKinsey & Co.

Kumar is now an ex-partner and pled guilty last month in the scheme. Goel is now an ex-Intel exec and pled guilty just the other day. (The gang has faced charges by both the SEC and the Justice Department.)

A previous Wharton alum, junk bond king Michael Milken, was embroiled in a monumental and famous insider-trading scandal in the late ’80s; he was indicted in 1989 on numerous racketeering and fraud charges.

In 1990, Milken pled guilty to a few counts, paid $200 million in fines, and was banned for life from the securities industry. Back on top now, Milken presents on his website an astoundingly detailed public-relations blitzkrieg in his own defense.

Whether or not he ever felt shame, Wharton officials certainly did. A month after Milken’s plea deal with the government, the school quietly removed his portrait from its Wall of Fame.

These days, the school may not offer its graduating M.B.A.’s a Harvard-style voluntary oath against greed. But Wharton does offer a Ph.D. in business ethics. (More information here).

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