Galleon boss Rajaratnam found guilty of insider trading
Published: 11th May 2011 15:56:39
US hedge fund billionaire Raj Rajaratnam has been found guilty of making tens of millions of dollars from insider trading.
The verdict brings to an end a nine-week trial which is part of what prosecuters call the largest hedge fund insider trading case in history.
Central to the prosecution's evidence were tapped phone calls between Rajaratnam and corporate insiders.
Rajaratnam has yet to be sentenced but faces up to 25 years in jail.
He was found guilty on all of the 14 charges he faced, including conspiracy, insider trading and securities fraud.
The jury decision had to be postponed for several days after one juror fell ill during their deliberations and had to be replaced.
Prosecutors argued Rajaratnam made as much as $63.8m (£39m) in illegal profits from 2003 to March 2009 by trading on tips from a network of highly-placed corporate insiders.
The companies traded included Google, Intel and Hilton Hotels, the prosecution said.
In his final closing arguments, Assistant US Attorney Jonathan Streeter said the Rajaratnam defence team wanted the jury to defy logic and common sense and ignore the evidence provided by dozens of recorded phone calls of illegal trading tips.
Prosecutors highlighted conversations they argued showed the win-at-all-cost attitude of Rajaratnam, who wanted to "conquer the market".
The court heard how investment manager Danielle Chiesi, speaking with Rajaratnam, boasted about one insider tip.
"They're going to guide down. I just got a call from my guy - I played him like a fine-tuned piano," she said.
In another call, she said she was "glad that we talk on a secure line".
In its original charge against Rajaratnam, US financial regulator the Securities and Exchange Commission said he was "not a master of the universe, but rather a master of the rolodex".
"He cultivated a network of high-ranking corporate executives and insiders, and then tapped into this ring to obtain confidential details about quarterly earnings and takeover activity."
Defence attorney John Dowd argued the secretly-recorded conversations were between traders discussing widely-known stock information.
He said prosecutors had failed to prove that Rajaratnam had broken any insider-trading laws.
The Sri-Lankan-born billionaire, 53, is the central figure in a sweeping US government probe of insider trading at hedge funds.
More than two dozen people have been criminally or civilly charged in the case. Most of them have pleaded guilty.
In September a former IBM executive, Robert Moffat, was sentenced to six months in jail and a $50,000 fine after pleading guilty to his role in tipping off Galleon with inside information from his former employer.
Moffat had leaked the information to Rajaratnam's colleague, Chiesi, with whom he was having an affair, and who has also pleaded guilty.
Harvard CitationBBC News, 2011. Galleon boss Rajaratnam found guilty of insider trading. [Online] (Updated 11 May 2011)
Available at: http://www.ukwirednews.com/news.php/152834-Galleon-boss-Rajaratnam-found-guilty-of-insider-trading [Accessed 22nd May 2013]
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