Written by – Ranuli at OmeBiz
Raj Rajarathnam, was a successful Wall Street Billionaire, who was well known to be one of the richest Sri Lankans to-date. The billionaire is a native Sri Lankan Tamil born in Colombo and schooled in S. Thomas Preparatory School, Kollupitya. Mr. Rajarathnam was high born, his father was the head of the Singer Sewing Machine Corporation in South Asia. In 1971, his family migrated to England where he attended Dulwich College in London. He later studied engineering at the University of Sussex, and then earned an MBA from the Wharton School of the University of Pennsylvania in 1983.
In October 2009, Raj Rajaratnam was arrested by the FBI for insider trading in the stocks of several publicly traded companies. U.S. Attorney Preet Bharara put the total profits in the scheme at over $60 million, telling a news conference that it was the largest hedge fund insider trading case in United States history. His attorney, Jim Walden, stated that his client is innocent and would fight the insider-trading charges.
Below are 7 riveting facts that will surprise you:
1. Started his career as a Lending Officer
He started his career as a lending officer at Chase Manhattan Bank, where he specialized in loaning to technology companies. He joined the investment banking boutique Needham & Co. as an analyst in 1985, where he focused on the consumer electronics industry. He rapidly rose through the ranks, becoming the head of research in 1987 and the president in 1991, at the age of 34!
2. Owner of a Hedge Fund valued at $7 Billion
At the company’s behest, he started a hedge fund—the Needham Emerging Growth Partnership—in March 1992, which he later bought and renamed Galleon. His hedge fund was valued at $3.7 billion in 2009, down from a peak of $7 billion in 2008. According to an investor letter in 2009, his $1.2 billion Diversified Fund had a net annualized return of 22.3 percent.
3. Listed as one of the Forbes 400 ‘Richest People in America’
Raj Rajaratnam, 51, had already made it to the Forbes 400 ‘Richest People in America’. His success made him a business celebrity in the South Asian community. He was one of the six Asians on the Forbes List! By 2009, Galleon Group, the Hedge Fund Company owned by Rajaratnam, recorded about $6 billion in assets and employed nearly 130 investment professionals.
The technology boom in the 90’s helped Galleon bring in extraordinary returns. Their main fund had a significant rise of 93% by the end of the decade. Raj developed a reputation as an aggressive buyer and seller with a robust personality. Raj Rajaratnam, 52, was recorded as the 236th Richest in America, with a net worth of $1.8 billion!
4. Featured in the New Investment Superstars book among elite US money managers
He initially invested in technology and healthcare companies. Raj mentioned that his best ideas came from companies in which he invested and from conversations with executives who invested in his fund.
5. Donated $1 million to help with the rehabilitation of the LTTE combatants
He donated generously to clear land mines in the war-affected areas in Sri Lanka. He recalled his visits to the land mine-impacted areas of Sri Lanka and underscored the humanitarian toll that mines have taken.
6. Longest Prison Sentence handed out for Insider Trading.
On May 11, 2011, Rajaratnam was found guilty on all 14 counts of conspiracy and securities fraud. On October 13, 2011, Rajaratnam was sentenced to 11 years in prison by Judge Richard Holwell. To date, this was the longest prison sentence ever handed out for insider trading. The thirteen other defendants connected to Rajaratnam’s case received prison sentences averaging approximately three years each. Rajaratnam is serving his 11-year sentence in Ayer, Massachusetts. His appeal to the United States Court of Appeals for the Second Circuit was argued in October 2012 by Patricia Millett, who subsequently became a federal Court of Appeals judge herself on the United States Court of Appeals for the District of Columbia Circuit on December 10, 2013.
7. The Sri Lankan Stock Market fell after this Arrest
The Sri Lankan stock market fell sharply after Rajaratnam was arrested on insider trading charges in October 2009.
Effect of Rajaratnam’s arrest on Sri Lanka (October 2009) –
- Galleon received requests from its investors for the withdrawal of $1.3 billion, which caused the fund to close.
- All funds of the Galleon group was to be winded down (October 21, 2009). However, Investors received the full balance of their initial investments, plus profits, in January 2010.
Raj was generous in many other ways as he,
- Helped Sri Lankans recover from the 2004 Tsunami.
- Contributed to various causes that promoted development in the Indian subcontinent and programs that benefited low income South Asian youth in the New York area.
- Helped generate over $118,000 in various political campaigns on behalf of Barack Obama, Hillary Clinton, Charles Schumer, and Robert Menendez! (Source: Federal Election Commission).
Rajaratnam who will be 60, is eligible for release in July 2021!