Raj Rajaratnam Sentenced For Insider Trading
In a case which is getting a lot of media attention, Raj Rajaratnam, the co-founder of the Galleon Group LLC was sentenced to 11 years imprisonment by US District Judge Richard Holwell for insider trading recently.
What is insider trading? There are complicated definitions and legal interpretations as to what constitutes criminal internal trading. In simple terms, it refers to people making investments and trading on securities based on the privileged information they have by virtue of the positions they hold, which information is not available at that time to the general public.
Every profession has certain ethical guidelines which are meant to be adhered to. Just as the field of medicine has its own code of conduct, so too does the area of finance and investment. There is clearly a conflict of interest if you use privileged information you have access to in making investments as they give you a very unfair advantage over others who do not have such information.
Insider trading can take place based on a many factors. These could include insights into strategic plans of corporations, information on likely movements, both in and out of key personnel and changes in legislation on the anvil that could have a major bearing on the corporation's business.
The Raj Rajaratnam story made news for many reasons. Prosecutors argued that he made more than $72 million by using illegal tips to trade in stocks of many companies including very reputed ones like Google, Intel, and Goldman Sachs. The 54 year old Rajaratnam is of Sri Lankan origin and has a MBA from the University of Pennsylvania's Wharton School of Business.
The prosecution asked for a sentence of 19 to 24 years for the hedge fund magnate. In pleading for a lighter sentence, his lawyers claimed that he was in ill-health and had done a lot of charitable work.
This case, to me, shows that there is no end to human greed. Every one has the aspiration to get ahead in life. Sadly, there seems to come a point when a few let success go into their heads and adopt unethical means to fatten their fortunes.