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Rajaratnam Raj Verdict

Rajaratnam Raj Verdict

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Published by Katya Wachtel

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Published by: Katya Wachtel on May 11, 2011
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05/20/2011

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United States Attorney Southern District of New York 
FOR IMMEDIATE RELEASECONTACT:U.S. ATTORNEY'S OFFICE MAY 11, 2011 ELLEN DAVIS, CARLY SULLIVAN,JERIKA RICHARDSON, EDELI RIVERA PUBLIC INFORMATION OFFICE(212) 637-2600
HEDGE FUND BILLIONAIRE RAJ RAJARATNAM FOUND GUILTYIN MANHATTAN FEDERAL COURT OF INSIDER TRADING CHARGES
Rajaratnam Convicted On 14 Counts For Illegal Stock TradesIn Companies Including Goldman Sachs, Clearwire, Akamai, AMD,Intel, Polycom, and PeopleSupport
PREET BHARARA, the United States Attorney for theSouthern District of New York, announced that RAJ RAJARATNAM wasfound guilty today by a jury in Manhattan federal court ofconspiracy and securities fraud crimes stemming from hisinvolvement in the largest hedge fund insider trading scheme inhistory. RAJARATNAM was the Managing Member of GalleonManagement, LLC ("Galleon"), the General Partner of GalleonManagement, L.P., and a portfolio manager for Galleon TechnologyOffshore, 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: "RajRajaratnam, once a high-flying billionaire and hedge fundmanager, is now a convicted felon,
 
14 times over. Rajaratnam wasamong 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 causehis undoing. The message today is clear -- there are rules andthere are laws, and they apply to everyone, no matter who you areor how much money you have. Unlawful insider trading should beoffensive to everyone who believes in, and relies on, themarket. It cheats the ordinary investor, victimizes the companieswhose information is stolen, and is an affront not only to thefairness of the market, but the rule of law.
 
In just over 18months, this office has charged 47 individuals with insidertrading crimes; Rajaratnam is the 35 person to be convicted. We
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will continue to pursue and prosecute those who believe they areboth above the law and too smart to get caught."According to the Superseding Indictment filed inManhattan federal court, other court documents, and statementsmade during related court proceedings:
 
From 2003 to March 2009, RAJARATNAM repeatedly tradedon material, nonpublic information pertaining to upcomingearnings forecasts, mergers, acquisitions, and other businesscombinations ("Inside Information"). The Inside Information wasgiven as tips by insiders and others at hedge funds, publiccompanies, and investor relations firms -– including GoldmanSachs, Intel, International Business Machines Corporation("IBM"), McKinsey & Company ("McKinsey"), Moody’s InvestorServices, Inc., Market Street Partners, Akamai Technologies, Inc.("Akamai"), and Polycom, Inc. ("Polycom"). Based on the InsideInformation, RAJARATNAM executed trades in the stock of publiccompanies, including Goldman Sachs, Clearwire, Akamai, AMD,Intel, Polycom, and PeopleSupport, earning tens of millions ofdollars.The evidence at trial included, among other things,recordings of wiretapped phone calls between RAJARATNAM and hisvarious co-conspirators, including: ANIL KUMAR, a senior partnerand director at McKinsey; RAJIV GOEL, an employee of Intel; ADAMSMITH, a portfolio manager and analyst at Galleon; and DANIELLECHIESI, an employee of the hedge fund New Castle Partners.RAJARATNAM engaged in overlapping conspiracies to commitsecurities fraud with these individuals, as well as with ROOMYKHAN, who traded securities on her own behalf.KUMAR, GOEL, SMITH, CHIESI, MARK KURLAND, an employeeat New Castle Partners, and ROBERT MOFFAT, a Senior VicePresident at IBM, were charged with RAJARATNAM and have allpreviously pled guilty to insider trading charges. ROOMY KHANwas arrested on October 19, 2009 and has also pled guilty.* * *RAJARATNAM was found guilty of five counts ofconspiracy to commit securities fraud and nine counts ofsecurities fraud. Each of the conspiracy counts carries amaximum sentence of five years in prison and a maximum fine ofthe greater of $250,000 or twice the gross gain or loss from theoffense. Each of the securities fraud counts carries a maximumsentence 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, at12:00 p.m.RAJARATNAM, 53, resides in New York, New York.-2-

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