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Brother of Raj Rajaratnam also indicted in alleged insider trading

March 21, 2013|By Andrew Tangel
  • "As alleged, Rengan Rajaratnam and his brother shared more than DNA, they also shared a penchant for insider trading," Preet Bharara, the U.S. attorney in Manhattan, said in a statement. Bharara is seen here in 2010.
"As alleged, Rengan Rajaratnam and his brother shared more than DNA,… (Ramin Talaie, Bloomberg )

NEW YORK -- The brother of one of Wall Street's most notorious crooks has been accused of insider trading himself.

Federal authorities on Thursday accused Rajarengan, or "Rengan," Rajaratnam, whose older brother Raj was convicted in 2011 of running a vast network of illicit information-sharing on Wall Street, of engaging in the same cheating in financial markets.

"As alleged, Rengan Rajaratnam and his brother shared more than DNA, they also shared a penchant for insider trading," Preet Bharara, the U.S. attorney in Manhattan, said in a statement.

Bharara said both Rajaratnam brothers were "at the heart of an insider-trading scheme that swept up an unprecedented number of people in its web of corruption, and with his indictment, we are one step closer to closing that chapter.”

Rengan Rajaratnam managed a portfolio for Galleon Group, the now-defunct hedge fund run by his brother who is serving an 11-year prison sentence.

The younger Rajaratnam, 42, allegedly conspired in 2008 with his brother to trade stocks based on lucrative information not available to the wide investing public.

The illicit trades involved Clearwire Corp., a Washington-based Internet service provider, and Advanced Micro Devices Inc., a Sunnyvale-based semiconductor maker. The scheme allegedly resulted in $1.2 million in profits, authorities said.

Rengan Rajaratnam was not yet in federal custody. Authorities said he lived in New York, but a source familiar said he was believed to be in Brazil.

The new insider-trading case again highlighted the federal government's continued focus on Wall Street corruption.

Just last week, the Securities and Exchange Commission announced a record $616-million settlement in an insider-trading case involving SAC Capital Advisors, a giant Wall Street hedge fund that has been dogged by government investigations.

After his initial stint at Galleon, the younger Rajaratnam wound up working at SAC Capital as an analyst from May 2003 until January 2004, said sources familiar with the matter who were not authorized to speak.

His time at SAC Capital does not appear to be related to the charges announced Thursday. According to biographical information provided by Bloomberg News, he founded Sedna Capital Management after he left SAC Capital. He later wound up back at Galleon, one of the sources said.

A lawyer for Rajaratnam could not be immediately reached.

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