We harbored no illusions that Raj Rajaratnam was going to beat the rap for insider trading, but we were rooting for him just the same. The hedge-fund billionaire faces a possible life sentence after being convicted by a jury on Wednesday on all 14 counts of a case billed as the biggest insider-trading scandal of them all. The poor schmuck! Like some zoo specimen of ecopistes miratorius, the common pigeon, he seems so very unlucky for having been one guy among 10,000 quasi-criminals on Wall Street whom the Feds chose to make an example of. Now Rajaratnam will go to jail for crimes against no one in particular, even though many of his colleagues who stole directly from investors through deceit, misrepresentation and gray-area fraud will remain free and unaccused. And rich. Moreover, at the time Rajaratnam was trading on insider tips, there were so many trillions of dollars’ worth of funny money swirling in the financial ether that, however much of the grand sum he stole, no other investor could demonstrably have been denied his fair share.
Because the crimes Raj is accused of committing are far worse than the ones that sent Martha Stewart to prison, it seems highly doubtful he’ll avoid doing time in a minimum security prison. Recall that Martha did what any of us would have done if we’d received a phone call from our broker’s clerk warning that a company in which we held quite a few shares was about to announce some bad news: She dumped the shares. However, because the Feds couldn’t get a jury to convict her for doing what most of us would have done, they ultimately sent her to prison for covering up the paper trail. And while Raj may also have lied to those who prosecuted him, over-the-top self-promoter that he was, we doubt that he would have lied to his clients. They all knew the guy was wired and that he had become rich by leveraging the most exclusive stock tips that money could buy. As far as the investors were concerned, it was undoubtedly a case of “Don’t ask, don’t tell.” Raj’s returns were too good to be true — but, hey, maybe the guy just had the Midas touch.
A Peddler of ‘Good Stuff’
So it was with Bernie Madoff. His top money-raisers undoubtedly knew that Bernie’s returns were inexplicably high. But hey, maybe he’s been on a roll for the last 20 years. Yeah, sure. They’ll all get sued to death, and beaten in court, by Madoff’s intrepid trustee, Irving Picard. But at least none of them will go to jail. They’re lucky to live in an era in which the moral boundaries of white-collar crime have grown so faint that we’ve ceased to recognize that the financial system itself is run as a quasi-criminal enterprise. When Facebook goes public for $50 billion, the ridiculous mark-ups over wholesale will all be there in the prospectus. Maybe that’s how Raj should have operated, carving out a large gray area by disclosing that the sources of his hot tips could not be assumed reliable. For what it’s worth, nearly all of the hot-tips to which we’ve been privy personally — but, perforce, did not act upon — would have produced a loss, not a gain. Give credit to Rajaratnam for peddling good stuff to clients willing to pay top dollar for it, even while his less successful colleagues, all of them hypocrites, continue to sell unmitigated swill to a gullible public.
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gd story!
Prof’s say “W’s gov’s only can pay int. no way to
pay down prin. (unless as you say w/ inflated printed
funds). U = . S total pub pvt debts est $75t,
or prof says ctwo hundred trillion , gdp us$14/t/yr,
debts 13x gdp.”