Raj-er and out!
The government put down another terrorist yesterday. Instead of blowing up buildings, Raj Rajaratnam and his kind destroy the sanctity of the great American capital markets when they rob people of their hard-earned money.
You’ve probably already heard that the 53-year-old Rajaratnam, a billionaire who ran an outfit called Galleon Group, was convicted of 14 counts of fraud and conspiracy. That’s all 14 counts against him — there wasn’t a single charge that the jury tossed the defense’s way as a consolation prize.
If Rajaratnam is unlucky, he’ll spend the next two decades in prison. With a little luck, he’ll be able to live with himself when he gets out.
GALLEON GROUP HEAD CONVICTED OF 14 INSIDER-TRADING AND CONSPIRACY CHARGES
MUTINEERS BRING DOWN BUCCANEER
VIDEO: RAJ RAJARATNAM FOUND GUILTY OF FRAUD
Fortunately for Rajaratnam, there’s a guy named Bernie Madoff, already rotting in jail, who committed a different kind of fraud against investors that was so outsized, it makes all others seem petty. But nothing can diminish the importance of Raj’s conviction.
Fraudulent trading — buying stocks on privileged, inside information — is not a victimless crime. Every dollar Raj made was a buck someone else lost. And the losers weren’t just other rich Wall Street traders.
The people on the sad side of Raj’s trades could have been the retirement fund in which your grandma has her money invested. Maybe Raj’s swindle even caused a loss in the stock fund you have in your retirement portfolio.
You won’t see Raj’s victims parading in front of the cameras telling their sad tales, like happened in the Madoff case. This was a silent crime — a second-story burglary of a vacant house in the dead of night.
But Raj’s case is more dastardly and more important than Madoff’s.
There will probably be only one Bernie Madoff. He isn’t a precedent for others.
But there are thousands of Raj Rajaratnams slithering around Wall Street trying to get an advantage — whether by legal means or not.
That’s what greed does. It makes you blind to the consequences of your actions. It makes people take chances that less avaricious and more honest folks wouldn’t dare take once they have achieved all the wealth anyone could possibly want.
Some people thought Raj would get off. Those are foolish people who don’t understand that the rest of us are tired of these shenanigans. I convicted Rajaratnam in a March 24 column, which started, “Bye, bye, Raj Rajaratnam!”
I was in the courtroom when the prosecution played intercepted tapes between Raj and Rajat Gupta, then a member of Goldman Sachs’ board of directors. The conversation clearly showed that these two fortunate sons of the American free and fair markets were doing something sinister. Something illegal.
Right now there are thousands of professional investors, traders, hedge-fund managers and the like searching their consciences for things they might have done or said in the past that could have been illegal. The rules on these things are, admittedly, pretty vague and can keep traders up nights.
US Attorney Preet Bharara, who prosecuted Raj, can’t track down all the wrongdoers. So the Rajaratnam case will help by making investment pros a little more cautious — until, of course, the memories of this case fade and the greed bug bites again.
But that’s not to say Bharara isn’t going after anyone else.
I don’t have any inside information on this — a joke, folks — but remember what I said above. The guy who was on one of those wiretapped phone conversations with Rajaratnam was a Goldman Sachs board member who, as far as anyone knows, has not been indicted. Gupta now knows he’s a goner unless his comes up with something the government really, really wants.
And that something could just be information against Goldman Sachs, which, I’ve reported in my columns, had the means of getting all sorts of confidential, privileged, wonderful information from the highest levels of the US government.