(The following is a reformatted version of a press release
issued by The U.S. Securities and Exchange Commission and
received via electronic mail. The release was confirmed by the
Contact: SEC Office of Public Affairs - 202-551-4120 
Web version: 
The SEC’s complaint is available at: 
Defense Counsel: David Tobin at Tobin O’Connor & Ewing in
Washington D.C. - 202-536-3359 
Washington, D.C., March 21, 2013 - The Securities and Exchange
Commission today charged Rajarengan “Rengan” Rajaratnam for his
role in the massive insider trading scheme spearheaded by his
older brother Raj Rajaratnam and 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, 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. 
“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,” said George S. Canellos, Acting
Director of the SEC’s Division of Enforcement. 
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 Rengan Rajaratnam. 
According to the SEC’s complaint filed in federal court in
Manhattan, Rengan Rajaratnam repeatedly received valuable
insider tips from his brother that he used for illegal trading
in the securities of Polycom, Hilton Hotels, Clearwire
Corporation, Akamai Technologies, and AMD.  For example, in July
2007, he made substantial profits trading Hilton stock in his
personal account based on a timely insider trading tip from Raj
Rajaratnam that Hilton was about to be taken private.  Rengan
Rajaratnam quickly loaded up on Hilton stock, and the price of
Hilton shares jumped more than 25 percent after the news became
public.  Rengan Rajaratnam cashed in his recently acquired
position for an illicit profit of more than $675,000. 
According to the SEC’s complaint, after Raj Rajaratnam tipped
him about an upcoming transaction involving Clearwire
Corporation in March 2008, Rengan Rajaratnam complained to his
brother that certain nonpublic information they had used to
begin accumulating a position in Clearwire stock was about to be
reported by the media before they could establish a larger
position.  Rengan Rajaratnam nevertheless profited by more than
$100,000 in his personal brokerage account and more than
$230,000 for Galleon hedge funds based on trades in Clearwire
The SEC’s complaint charges Rengan Rajaratnam with violations of
Section 10(b) of the Securities Exchange Act of 1934 and Rule
10b-5.  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 SEC’s investigation, which is continuing, has been conducted
by John Henderson and Joseph Sansone - members of the SEC’s
Market Abuse Unit in New York - and Matthew Watkins, Diego
Brucculeri, and James D’Avino of the New York Regional Office.
The SEC appreciates the assistance of the U.S. Attorney’s Office
for the Southern District of New York and the Federal Bureau of
The SEC has now charged 33 defendants in its Galleon-related
enforcement actions, which have exposed widespread and repeated
insider trading at numerous hedge funds and by other traders,
investment professionals, and corporate insiders located
throughout the country.  The insider trading occurred in the
securities of more than 15 companies for illicit gains totaling
more than $96 million. 
(bjh) NY 
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