The Raj Rajaratnam's Conspiracy And Securities Fraud Essay - 19

The Raj Rajaratnam's Conspiracy And Securities Fraud - Essay Example Rajaratnam had a continuous pattern of using insider trading to make millions of dollars in profits. Typically insider trading occurs as one time tips that a person exploits. A smart insider trader will not abuse his knowledge to earn money to stay off the radar of the Securities and Exchange Commission (SEC). Greed was the primary factor that led to the demise of Raj Rajaratnam. Information asymmetry in the financial market is a posing great risk. This risk is characteristic of insider trading activities. These activities and underground operations are tailored towards benefiting a few in the society. Considering the Galleon insider trading saga, the parties that were set to benefit from illegal activities are few. Investors and more especially the hedgers should have common information regarding market share movements of companies (Jones, 1996, pg. 143). However, a few individuals through cooperation and collaboration sought to take advantage of crucial information only available to them. Of course, an inside job is a context upon which the participants to these fraudulent activities thrived and thereby succeeded in their quest to reap huge profits by taking advantage of company performance in the financial market (Girgenti, 2010, pg. 88). Kamal Ahmed among other senior employees of companies listed in the investigations offered crucial information on payment. Such an activity is risky for the financial markets because information symmetry is expected to influence the decisions of investors. Acts of corruption and bribery are therefore integrated into the insider trading activity allowing for the few involved to take advantage of the entire shareholding and investing community. The losses of many are the profits of a few. Due to the high secrecy that insider trading activities require, it seems obvious that successful businessmen and prominent people may be the major participants in such activities.