The Securities and Exchange Commission has charged Rajarengan Rajaratnam for participating in a “massive insider trading scheme” that was spearheaded by his older brother Raj Rajaratnam and hedge fund advisory firm Galleon Management.
The US authority alleges that between 2006 and 2008, Rajarengan Rajaratnam, known as Rengan, repeatedly obtained inside information from his brother. Through this, he allegedly netted some $3 million in illicit gains for himself and hedge funds he managed at Galleon and Sedna Capital Management, a hedge fund advisory firm that he co-founded.
Furthermore, the SEC alleges that Rengan Rajaratnam was “an active participant” in his brother’s scheme to cultivate highly-placed sources and extract confidential information for an unfair advantage over other traders, it said.
The US Attorney’s Office for the Southern District of New York has announced criminal charges against Rengan Rajaratnam.
According to the SEC’s complaint - filed in federal court in Manhattan - Rengan Rajaratnam received multiple insider tips from his brother, which he subsequently used for illegal trading in the securities of Polycom, Hilton Hotels, Clearwire Corporation, Akamai Technologies and AMD.
“The complaint seeks a final judgment permanently enjoining Rajaratnam from future violations of these provisions of the federal securities laws, ordering him to disgorge his ill-gotten gains plus prejudgment interest, and ordering him to pay financial penalties,” the authority said.