United States Attorney
Southern District of New York
FOR IMMEDIATE RELEASE CONTACT: U.S. ATTORNEY’S OFFICE
MAY 11, 2011 ELLEN DAVIS, CARLY SULLIVAN,
Rajaratnam Convicted On 14 Counts For Illegal Stock Trades
In Companies Including Goldman Sachs, Clearwire, Akamai, AMD,
Intel, Polycom, and PeopleSupport
PREET BHARARA, the United States Attorney for the
Southern District of New York, announced that RAJ RAJARATNAM was
found guilty today by a jury in Manhattan federal court of
conspiracy and securities fraud crimes stemming from his
involvement in the largest hedge fund insider trading scheme in
history. RAJARATNAM was the Managing Member of Galleon
Management, LLC (“Galleon”), the General Partner of Galleon
Management, L.P., and a portfolio manager for Galleon Technology
Offshore, Ltd., and certain accounts of Galleon Diversified Fund,
Ltd. He was convicted after an eight-week trial before U.S.
District Judge RICHARD J. HOLWELL.
Manhattan U.S. Attorney PREET BHARARA stated: “Raj
Rajaratnam, once a high-flying billionaire and hedge fund
manager, is now a convicted felon, 14 times over. Rajaratnam was
among the best and the brightest – one of the most educated,
successful and privileged professionals in the country. Yet,
like so many others recently, he let greed and corruption cause
his undoing. The message today is clear — there are rules and
there are laws, and they apply to everyone, no matter who you are
or how much money you have. Unlawful insider trading should be
offensive to everyone who believes in, and relies on, the
market. It cheats the ordinary investor, victimizes the companies
whose information is stolen, and is an affront not only to the
fairness of the market, but the rule of law. In just over 18
months, this office has charged 47 individuals with insider
trading crimes; Rajaratnam is the 35 person to be convicted. We th
will continue to pursue and prosecute those who believe they are
both above the law and too smart to get caught.”
According to the Superseding Indictment filed in
Manhattan federal court, other court documents, and statements
made during related court proceedings:
From 2003 to March 2009, RAJARATNAM repeatedly traded
on material, nonpublic information pertaining to upcoming
earnings forecasts, mergers, acquisitions, and other business
combinations (“Inside Information”). The Inside Information was
given as tips by insiders and others at hedge funds, public
companies, and investor relations firms -– including Goldman
Sachs, Intel, International Business Machines Corporation
(“IBM”), McKinsey & Company (“McKinsey”), Moody’s Investor
Services, Inc., Market Street Partners, Akamai Technologies, Inc.
(“Akamai”), and Polycom, Inc. (“Polycom”). Based on the Inside
Information, RAJARATNAM executed trades in the stock of public
companies, including Goldman Sachs, Clearwire, Akamai, AMD,
Intel, Polycom, and PeopleSupport, earning tens of millions of
The evidence at trial included, among other things,
recordings of wiretapped phone calls between RAJARATNAM and his
various co-conspirators, including: ANIL KUMAR, a senior partner
and director at McKinsey; RAJIV GOEL, an employee of Intel; ADAM
SMITH, a portfolio manager and analyst at Galleon; and DANIELLE
CHIESI, an employee of the hedge fund New Castle Partners.
RAJARATNAM engaged in overlapping conspiracies to commit
securities fraud with these individuals, as well as with ROOMY
KHAN, who traded securities on her own behalf.
KUMAR, GOEL, SMITH, CHIESI, MARK KURLAND, an employee
at New Castle Partners, and ROBERT MOFFAT, a Senior Vice
President at IBM, were charged with RAJARATNAM and have all
previously pled guilty to insider trading charges. ROOMY KHAN
was arrested on October 19, 2009 and has also pled guilty.
* * *
RAJARATNAM was found guilty of five counts of
conspiracy to commit securities fraud and nine counts of
securities fraud. Each of the conspiracy counts carries a
maximum sentence of five years in prison and a maximum fine of
the greater of $250,000 or twice the gross gain or loss from the
offense. Each of the securities fraud counts carries a maximum
sentence of 20 years in prison and a fine of $5 million.
RAJARATNAM faces a maximum prison term of 205 years in total.
RAJARATNAM is scheduled to be sentenced on July 29, 2011, at
RAJARATNAM, 53, resides in New York, New York.
Mr. BHARARA praised the investigative work of the
Federal Bureau of Investigation and thanked the U.S. Securities
and Exchange Commission for its extraordinary assistance.
Assistant U.S. Attorneys JONATHAN STREETER and REED
BRODSKY, and Special Assistant U.S. Attorney ANDREW MICHAELSON
are in charge of the prosecution.