Raj Rajaratnam is almost the perfect villain for an America still coming to terms with the impact of the global downturn and the financial crisis that sparked it.
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Last Updated: May 17, 2011
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The disgraced billionaire's fleshy face has, like that of con man financier Bernie Madoff, become an embodiment of the worst sort of Wall Street "fat cat". He was rich beyond imagining but his greed meant he still wanted more. As a hedge fund manager, he was deeply entwined in the sort of complex financial dealings many now distrust.
His arrogance, according to the jury that convicted him on 14 counts of securities fraud and conspiracy, meant he was willing to break laws that others obey, symbolising the idea that when it comes to high finance, the rich play by different rules in a rigged game.
Now that Rajaratnam has been found guilty of insider trading and seems set to spend a lengthy stretch behind bars, unless he wins his appeal, the US is mulling over what the verdict means.
At first glance there seems a lot of scope to justify the flood of column inches devoted to every twist and turn of the Rajaratnam case. Putting the former Galleon hedge fund manager on trial was certainly a victory for the department of justice and especially Preet Bhahara, the US attorney for Manhattan.
Over the past 18 months, Mr Bhahara's office has charged 47 people with insider trading, of whom 36 have pleaded guilty or been convicted.
That is quite a work rate.
Nor were Rajaratnam and Galleon small fry. In the past, Wall Street investigators have been accused of picking off symbolic cases, handing out sentences to a few junior executives but letting bigger fish swim away.
But Rajaratnam was one of Wall Street's top names, and he was seen as a canny investor by his peers.
At its height, Galleon managed US$7 billion (Dh25.7bn) of assets and was a huge client of some of the biggest investment banks in the world. For those who want a stronger watchdog on Wall Street, this is reassuring evidence the bankers and traders do not always get their own way.
There is more: the key development in the Rajaratnam case was the use of covert wiretaps by federal investigators. It was the first time that had happened in a securities case, rather than, say, a mobster investigation. But there is no sign it will be the last. Already this powerful new tool is being used in other cases.
Late last year, John Kinnucan, a financial analyst in Oregon, was asked by the FBI to record his phone calls with a hedge fund client. He declined and e-mailed his clients to tell them about the request. But how many others have agreed? Anyone thinking of repeating Rajaratnam's scheme should at least have a nagging fear of who might be listening in these days.
Certainly there have been reports of security firms being hired by hedge funds to sweep their offices for electronic bugs. The funds have upped their budgets to cover legal issues and increased their efforts to track down illegal trades.
But that is where the long-term implications of the Rajaratnam case end. The fact is insider trading in stocks and bonds is not a huge problem for the US economy. It played no meaningful part in causing the financial crash of 2008.
It is not a systemic risk to the wider economic workings of America. And the slew of cases nailing people for insider trading has been overshadowed by a complete lack of cases over the sort of things that did help cause the economic crisis.
Despite appalling practices in the way home loans were sold and the packaging of toxic mortgage-backed securities with top credit ratings, there has not been a single high-profile criminal prosecution at a major financial institution.
So far, it seems to many Americans, those on Wall Street who helped cause misery for millions have escaped the sort of scrutiny Rajaratnam got.
Of course, no one is saying it will be easy. Aside from pursuing insider traders, the intrepid Mr Bhahara recently filed a civil suit against Deutsche Bank accusing it of lying about mortgage quality on its books. Although he conceded he did not have enough evidence to justify a criminal case, his action was a step in the right direction.
There are other signs, too. Recently, Goldman Sachs shares took a sudden tumble.
It happened after media gadfly Matt Taibbi, the Rolling Stone journalist, wrote a hard-hitting piece saying the once blue-blood bank should face legal charges as a result of a Senate investigation into its business practices. Two stock analysts then downgraded the bank's stock, sparking a sell-off.
Legal worries now cloud Goldman's future in a way that seemed unthinkable even last year. Its once pristine reputation appears deeply tarnished.
Whether this will lead to criminal charges remains to be seen. But people on Wall Street are worrying about the possibility.
That, in the end, could be far more significant than putting Rajaratnam behind bars.
business@thenational.ae
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COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Water waste
In the UAE’s arid climate, small shrubs, bushes and flower beds usually require about six litres of water per square metre, daily. That increases to 12 litres per square metre a day for small trees, and 300 litres for palm trees.
Horticulturists suggest the best time for watering is before 8am or after 6pm, when water won't be dried up by the sun.
A global report published by the Water Resources Institute in August, ranked the UAE 10th out of 164 nations where water supplies are most stretched.
The Emirates is the world’s third largest per capita water consumer after the US and Canada.
KILLING OF QASSEM SULEIMANI
Dirham Stretcher tips for having a baby in the UAE
Selma Abdelhamid, the group's moderator, offers her guide to guide the cost of having a young family:
• Buy second hand stuff
They grow so fast. Don't get a second hand car seat though, unless you 100 per cent know it's not expired and hasn't been in an accident.
• Get a health card and vaccinate your child for free at government health centres
Ms Ma says she discovered this after spending thousands on vaccinations at private clinics.
• Join mum and baby coffee mornings provided by clinics, babysitting companies or nurseries.
Before joining baby classes ask for a free trial session. This way you will know if it's for you or not. You'll be surprised how great some classes are and how bad others are.
• Once baby is ready for solids, cook at home
Take the food with you in reusable pouches or jars. You'll save a fortune and you'll know exactly what you're feeding your child.
How to avoid crypto fraud
- Use unique usernames and passwords while enabling multi-factor authentication.
- Use an offline private key, a physical device that requires manual activation, whenever you access your wallet.
- Avoid suspicious social media ads promoting fraudulent schemes.
- Only invest in crypto projects that you fully understand.
- Critically assess whether a project’s promises or returns seem too good to be true.
- Only use reputable platforms that have a track record of strong regulatory compliance.
- Store funds in hardware wallets as opposed to online exchanges.
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
The National Archives, Abu Dhabi
Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.
Much of the material can be viewed on line at the Arabian Gulf Digital Archive - https://www.agda.ae/en
The alternatives
• Founded in 2014, Telr is a payment aggregator and gateway with an office in Silicon Oasis. It’s e-commerce entry plan costs Dh349 monthly (plus VAT). QR codes direct customers to an online payment page and merchants can generate payments through messaging apps.
• Business Bay’s Pallapay claims 40,000-plus active merchants who can invoice customers and receive payment by card. Fees range from 1.99 per cent plus Dh1 per transaction depending on payment method and location, such as online or via UAE mobile.
• Tap started in May 2013 in Kuwait, allowing Middle East businesses to bill, accept, receive and make payments online “easier, faster and smoother” via goSell and goCollect. It supports more than 10,000 merchants. Monthly fees range from US$65-100, plus card charges of 2.75-3.75 per cent and Dh1.2 per sale.
• 2checkout’s “all-in-one payment gateway and merchant account” accepts payments in 200-plus markets for 2.4-3.9 per cent, plus a Dh1.2-Dh1.8 currency conversion charge. The US provider processes online shop and mobile transactions and has 17,000-plus active digital commerce users.
• PayPal is probably the best-known online goods payment method - usually used for eBay purchases - but can be used to receive funds, providing everyone’s signed up. Costs from 2.9 per cent plus Dh1.2 per transaction.
Where to donate in the UAE
The Emirates Charity Portal
You can donate to several registered charities through a “donation catalogue”. The use of the donation is quite specific, such as buying a fan for a poor family in Niger for Dh130.
The General Authority of Islamic Affairs & Endowments
The site has an e-donation service accepting debit card, credit card or e-Dirham, an electronic payment tool developed by the Ministry of Finance and First Abu Dhabi Bank.
Al Noor Special Needs Centre
You can donate online or order Smiles n’ Stuff products handcrafted by Al Noor students. The centre publishes a wish list of extras needed, starting at Dh500.
Beit Al Khair Society
Beit Al Khair Society has the motto “From – and to – the UAE,” with donations going towards the neediest in the country. Its website has a list of physical donation sites, but people can also contribute money by SMS, bank transfer and through the hotline 800-22554.
Dar Al Ber Society
Dar Al Ber Society, which has charity projects in 39 countries, accept cash payments, money transfers or SMS donations. Its donation hotline is 800-79.
Dubai Cares
Dubai Cares provides several options for individuals and companies to donate, including online, through banks, at retail outlets, via phone and by purchasing Dubai Cares branded merchandise. It is currently running a campaign called Bookings 2030, which allows people to help change the future of six underprivileged children and young people.
Emirates Airline Foundation
Those who travel on Emirates have undoubtedly seen the little donation envelopes in the seat pockets. But the foundation also accepts donations online and in the form of Skywards Miles. Donated miles are used to sponsor travel for doctors, surgeons, engineers and other professionals volunteering on humanitarian missions around the world.
Emirates Red Crescent
On the Emirates Red Crescent website you can choose between 35 different purposes for your donation, such as providing food for fasters, supporting debtors and contributing to a refugee women fund. It also has a list of bank accounts for each donation type.
Gulf for Good
Gulf for Good raises funds for partner charity projects through challenges, like climbing Kilimanjaro and cycling through Thailand. This year’s projects are in partnership with Street Child Nepal, Larchfield Kids, the Foundation for African Empowerment and SOS Children's Villages. Since 2001, the organisation has raised more than $3.5 million (Dh12.8m) in support of over 50 children’s charities.
Noor Dubai Foundation
Sheikh Mohammed bin Rashid Al Maktoum launched the Noor Dubai Foundation a decade ago with the aim of eliminating all forms of preventable blindness globally. You can donate Dh50 to support mobile eye camps by texting the word “Noor” to 4565 (Etisalat) or 4849 (du).
Simran
Director Hansal Mehta
Stars: Kangana Ranaut, Soham Shah, Esha Tiwari Pandey
Three stars
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
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Business Insights
- As per the document, there are six filing options, including choosing to report on a realisation basis and transitional rules for pre-tax period gains or losses.
- SMEs with revenue below Dh3 million per annum can opt for transitional relief until 2026, treating them as having no taxable income.
- Larger entities have specific provisions for asset and liability movements, business restructuring, and handling foreign permanent establishments.
COMPANY%20PROFILE%20
%3Cp%3E%3Cstrong%3ECompany%20name%3A%20%3C%2Fstrong%3EAlmouneer%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202017%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Dr%20Noha%20Khater%20and%20Rania%20Kadry%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EEgypt%3Cbr%3E%3Cstrong%3ENumber%20of%20staff%3A%20%3C%2Fstrong%3E120%3Cbr%3E%3Cstrong%3EInvestment%3A%20%3C%2Fstrong%3EBootstrapped%2C%20with%20support%20from%20Insead%20and%20Egyptian%20government%2C%20seed%20round%20of%20%3Cbr%3E%243.6%20million%20led%20by%20Global%20Ventures%3Cbr%3E%3C%2Fp%3E%0A
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)