‘Wall Street was tough to get into for us,” Raj Rajaratnam, the founder of the Galleon Group hedge fund, explained to Newsweek’s Suketu Mehta after his conviction on multiple charges of insider trading. “Not to be crude, but there’s a Jewish mafia, and a WASP mafia, and an Irish mafia up in Boston.” As Rajaratnam saw it, every other ethnic group hired its own, socialized with its own and, yes, even traded information with its own. So why should South Asian Americans be any different or be held to a different standard?

In this age of political correctness, there is a tendency to shy away from talking candidly about culture and ethnicity in explaining business behavior — to do so runs the risk of being accused of stereotyping and racism. Yet a fully truthful account cannot ignore such factors and influences. How else can we explain how Bernie Madoff was able to steal tens of billions of dollars from a who’s-who list of Jewish American machers? Or how an immigrant from Sri Lanka was able to build a $7 billion financial empire by tapping into a network of successful Indian Americans?

In “The Billionaire’s Apprentice,” Anita Raghavan sets out to blend whodunit financial reporting with cultural analysis, taking as her subtitle “The Rise of the Indian-American Elite and the Fall of the Galleon Hedge Fund.” And who better to tell Rajaratnam’s story than an Indian American who spent 18 years as a reporter for the Wall Street Journal?

Unfortunately, the book’s execution does not fully live up to its aspiration. While Raghavan’s reporting and research are admirably thorough, she is challenged as a writer by the number of characters and by the need to weave together their individual histories and stories in a way that doesn’t confuse her reader or even herself. At other times, she seems overwhelmed by the volume of information contained in depositions, court transcripts and secretly recorded telephone conversations. By the end, Raghavan finds herself so immersed in biographical and investigative details that she fails to deliver on the promise of connecting the Galleon saga to the larger story of the Indian American experience.

This is not to say that “The Billionaire’s Apprentice” doesn’t offer a rich, dramatic tale full of fascinating characters and interesting plot twists. There is Rajaratnam, an indefatigable networker and name-dropper who interviews job applicants at strip bars, joins a fantasy football league with hedge fund legends Stanley Druckenmiller and Paul Tudor Jones, hires Kenny Rogers to play at his birthday bash and, in 20 years, manages to climb the greasy pole from obscure stock analyst to a Forbes 400 billionaire. Rajaratnam is a master at identifying people’s emotional vulnerabilities and using these, along with flattery, taunts and money, to manipulate their behavior.

“The Billionaire’ Apprentice: The Rise of the Indian-American Elite and the Fall of the Galleon Hedge Fund” by Anita Raghavan. (Hachette)

His network of friends and informants comes to include Rajat Gupta, the brilliant and disciplined son of a poor Brahmin family from Kolkata (formerly known as Calcutta) who wheedles his way into the elite Indian Institutes of Technology, excels at Harvard Business School and rises through the ranks to become the managing partner at the blue-chip consulting firm McKinsey & Co. There is Anil Kumar, Rajaratnam’s classmate at the Wharton School of Business at the University of Pennsylvania and Gupta’s protege at McKinsey, who, frustrated with the lack of career advancement, passes on his clients’ secrets in exchange for a $500,000 annual retainer funneled through an offshore account set up in the name of his housekeeper. Along the way, we also meet Roomy Kahn, a onetime Intel executive addicted to gossip and high living who is caught not once but twice by the FBI passing on inside information to Galleon and twice turned into a government informant.

Wearing the white hats are Preetinder Bharara, who parlays his work for Sen. Chuck Schumer into an appointment as U.S. attorney in Manhattan — and de facto chief cop on Wall Street; and Sanjay Wadhwa, an Indian American who gives up a lucrative career as a Wall Street tax lawyer to chase after financial fraud at the Securities and Exchange Commission. By the time they are done, they will have swept up 24 in their Galleon net. In this drama, there are also cameo roles for Goldman Sachs chief executive Lloyd Blankfein, George Soros, Bill Gates, Enron’s Jeffrey Skilling, Presidents Bill Clinton and Obama, and Geoffrey Canada of the Harlem Children’s Zone.

While Raghavan maintains a reportorial objectivity, its hard not to come away from her narrative with the impression that Wall Street is a sleazy game rigged by and for insiders. This is a world in which analysts and traders are so focused on finding out if a company is about to provide a quarterly earnings forecast of a penny above or below expectations that it never occurs to anyone to ask whether there is a shred of social or economic utility to what these overcompensated analysts and traders do all day.

A reader will also come away with an appreciation of how fine a line there is between legitimate research and illegal trafficking in inside information, and how clever the players had become in disguising the one as the other. So confident was Rajaratnam that he would never be caught that he brazenly continued to trade on inside information even after turning over millions of pages of documents and phone records to the SEC and spending a day being deposed by the agency’s lawyers. His was the first case in which prosecutors were allowed to use phone wiretaps to gather irrefutable evidence of insider trading. Without it, Galleon would still be in business; because of it, the world of hedge funds has been permanently changed.

In “The Billionaire’s Apprentice,” Raghavan provides readers with the best account yet of Rajaratnam and his Indian American “mafia” — who they were, what they did and how they did it. What remains a mystery is why they did it, and what that might tell us about South Asian culture and the Indian American experience.

Steven Pearlstein is a business and economics columnist at The Washington Post and the Clarence Robinson professor of public and international affairs at George Mason University.


The Rise of the Indian-American Elite and the Fall of the Galleon Hedge Fund

By Anita Raghavan

Business Plus. 493 pp. $29