Rajarengan “Rengan” Rajaratnam was charged by the Securities and Exchange Commission Thursday for his role in the massive insider trading scheme spearheaded by his older brother Raj Rajaratnam and the hedge fund advisory firm Galleon Management.
The SEC alleges that from 2006 to 2008, Rengan Rajaratnam repeatedly received inside information from his brother and reaped more than $3 million in illicit gains for himself and hedge funds that he managed at Galleon and Sedna Capital Management, a hedge fund advisory firm that he co-founded.
In addition to illegally trading on inside tips, the younger 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,” the SEC said.
George Canellos, acting director of the SEC’s Division of Enforcement, said in a statement that “Our complaint against Rengan Rajaratnam tells a sad tale of a man who followed his brother down an illegal path of greed to its inevitable conclusion.”
Sanjay Wadhwa, senior associate director of the SEC’s New York Regional Office, added, “Rengan Rajaratnam profited handsomely from his brother’s insider trading activities, and he may have believed he wouldn’t have to pay a price for his involvement. But now he is learning the true cost of his participation in the most expansive insider trading scheme ever perpetrated.”
In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against the younger Rajaratnam.