Further on the question of whether it is appropriate for the S.E.C. to have departed from its standard practice and have issued a press release with a headline and first paragraph referring to "billionaire Raj Rajaratnam," the U.S. Attorneys' Manual offers guidelines that apply at the Department of Justice. The Securities and Exchange Commission is a different creature, of course, and has its own standards, but the Justice Department rules are a useful yardstick for comparison. Those Justice Department guidelines say, "Department personnel, subject to specific limitations imposed by law or court rule or order and consistent with the provisions of these guidelines, may make public the following information in any criminal case in which charges have been brought: The defendant's name, age, residence, employment, marital status, and similar background information; The substance of the charge, limited to that contained in the complaint, indictment, information, or other public documents." It's debatable whether "billionaire" qualifies as "similar background information." The "billionaire" characterization contained in the press release is not contained in the text of the actual SEC complaint, which is also a bit odd, because these types of press releases from law enforcement agencies usually stick pretty closely to the formal legal documents. I have calls in to the SEC seeking their justification for characterizing Mr. Rajaratnam as a billionaire and will update when and if I hear back. One thing I asked is how do they know he is a billionaire? It's certainly possible he is, but it's also possible that he isn't.
The most often-quoted authority on such matters, Forbes, can be wrong on such matters by as much as $15 billion when it comes to even high-profile figures such as Mayor Bloomberg, as this New York Sun article pointed out. The magazine's estimate of Donald Trump's wealth figured in a lawsuit against a New York Times editor. In this particular case, the Forbes item estimating Mr. Rajaratnams' wealth at $1.5 billion also claimed that his firm had $7 billion in assets under management. The S.E.C. complaint, though, says that as of March 2009 Galleon had "over $2.6 billion under management." An article in the Wall Street Journal put Galleon's assets at $3.7 billion and said the firm had about 130 employees in Manhattan. If the Forbes item overstated Galleon's assets under management by doubling or tripling them, it might be off by a similar factor on Mr. Rajaratnam's wealth. A person can make a lot of money as a hedge fund manager given the usual fee structure of 2% of assets under management and 20% of gains. But Mr. Rajaratnam still has to pay taxes and for all those employees. And Forbes says he's only been at it since 1997. Either way, it doesn't quite add up. If the S.E.C. is confident of Mr. Rajaratnam's billionaire status and thinks it's relevant to the case, why didn't the agency include it in the complaint? And if the S.E.C. has enough doubts about Mr. Rajaratnam's billionaire status that it was uncomfortable attesting to it in a filing with the federal court of the Southern District of New York, why include it in the press release?