Why? The Insider Trading story of the decade has just exploded in Wall Street. And we Sri Lankans, living half a world away from the Big Apple were all affected for many reasons. For one, the Billionaire in handcuffs is Sri Lankan born Raj Rajaratnam. Secondly, he is someone who has invested in most of our top ten companies, sometimes holding as much as 10% in our blue chips!

The press release by the SEC from Washington gives a clue as to how this King (pardon the pun!) manipulated stocks in the biggest market in the world!

The SEC charged billionaire Raj Rajaratnam and his New York-based hedge fund advisory firm Galleon Management LP with engaging in a massive insider trading scheme that generated more than $25 million in illicit gains. The SEC also charged six others involved in the scheme, including senior executives at major companies IBM, Intel and McKinsey & Company.

The SEC's complaint, filed in federal court in Manhattan, alleges that Rajaratnam tapped into his network of friends and close business associates to obtain insider tips and confidential information about corporate earnings or takeover activity at several companies, including Google, Hilton and Sun Microsystems. He then used the non-public information to illegally trade on behalf of Galleon.

What? He used 'non-public' information? What  a beautiful euphemism! I don't think that even  President Obama, known for his mastery of words,  could have bettered that statement!

Whilst a man is innocent until proven guilty, it seems that poor Raj is in a bit of a soup, considering that the State has wire tapped him since 2007. And what is on tape, legally, is a bit hard to erase! It may be difficult to find 'an offer they can't refuse' (apologies to Don Corleone, the Godfather) to twist the arms of the law makers in the US. This goes on record for being the first time a wire-tap was used to snare  culprits in insider trading in the US.

The SEC Chairman Mary L. Schapiro is quoted as saying, "This complaint describes a web of fraud that has been unraveled." 

And if anyone had thought that the billionaire made his billons through sheer genius, a Director of the SEC has this to say, "What we have uncovered in the trading activities of Raj Rajaratnam is that the secret of his success is not genius trading strategies. He is not the astute study of company fundamentals or marketplace trends that he is widely thought to be. Raj Rajaratnam is not a master of the universe, but rather a master of the rolodex. He cultivated a network of high-ranking corporate executives and insiders, and then tapped into this ring to obtain confidential details about quarterly earnings and takeover activity."

Well, why are the Americans so surprised? We Sri Lankans are a lazy lot. We take the shortest path wherever, whenever possible. Why go about studying all sorts of Balance Sheets, P and Ls, ROIs and what have you, when just a short call would do! Honestly, what naiveté! Don't they know that Colombo is a very small village? And maybe this billionaire learnt a thing or two from here when he visited his old country!

And I do take great umbrage that this official goes around saying that  Raj is not a genius. And that he is a 'master of the Rolodex'. Did everyone who had a Rolodex end up a Billionaire? And it takes a genius to involve IBM, Intel, Google, Hilton and Sun Microsystems (and many many more, I am sure!) into a super cartel of information sharing. Certainly a very superior tangled web of deceit. Unadultrated genius in my book!

And as in all webs of such sort, the untangling starts with the very people who are involved. Reports in the Wall Street Journal, in an article titled "Colleagues Finger Billionaire", state very clearly that "parts of that network appear to have turned on the billionaire investor. Three former colleagues of Mr. Rajaratnam secretly are bolstering the government's probe."

The CEO of Galleon, the hedge-fund he co-founded back in 1996, apparently drove his team hard, very hard. They had to deliver, and deliver smart. To the extent that, anyone who was late for the morning meeting was fined $25, according to a very thorough article in Bloomburg. Former employees have stated that when they were not able to get market-moving information, they were criticized and shoved out.

Raj and Galleon are charged on  insider trading, which the authorities say "generated more than $25 Millon in illicit profits which came at the expense of the average public investor". The bail set was a phenomenal 100Million Dollars, and secured by  $20M in collateral. Now that is saying something about the enormity of the crime he is accused of!

What is of interest to us in Sri Lanka, is another facet of this story. Apparently, as part of the investigation federal agents have uncovered that he is among some of the several wealthy Sri Lankans in the US who made donations to a charity called TRO, or Tamil Rehabilitation Organization , which was later found to be a front for the LTTE terrorists by the US officials and banned in the US in 2007. He is also thought to be "Individual B" who made donations totaling $1Million in 2000 and another $1Million in 2004 to TRO USA which were then wired to the TRO's Sri Lankan bank accounts.

But many Sri Lankan sources say that he only tried to help Sri Lanka post-Tsunami, and that TRO was the only way to get monies to the North! (That somehow doesn't  jell for the 2000 donation!)  He had apparently also  made significant donations to re-build the South after the Tsunami. And he very recently, was in the headlines here for confirming $1Million to rehabilitate former Tiger cadres. A fact  that won accolades as he was one of the first Tamil Diaspora members to invest in such a cause.

He  also made donations to the Democratic Party - $26,200 in 2007, $4600 to Hillary Clinton's campaign in 2007 and $4600 to President Obama's campaign in 2008. A Democratic National committee spokes person has said that these donations will now be re-donated to charity! But, one gets thinking whether all these barbs coming our way, mouthed by top officials in the US, have something to do with all these donations - known and unknown!

But as to why, Raj, whose $1.3Billion fortune makes him the 559th richest person in the World, had to resort to these sort of underhand tactics is the Million dollar, or rather the 25Million dollar question?

Maybe it is just not enough to have One Billion Dollars!

It is said that, "power corrupts, absolute power corrupts absolutely", but maybe having big money is far worse. Especially, if one has made that money  always  by being corrupt.

And in a strange twist to the story of the Emperor and his New Clothes, sadly for this King,  his slip is showing!