RajaratnamOpalesque Industry Update - After 12 days of deliberation and more than two months of a grueling and sometimes emotional trial, a jury on Wednesday found former hedge fund manager and one-time billionaire Galleon founder Raj Rajaratnam guilty on all 14 counts of conspiracy and securities fraud, various media reports said.
Government prosecutors hail the verdict, which was announced in U.S. District Court in Manhattan, as a major victory in the fight against insider trading. The high-profile Galleon case has been at the heart of a federal crackdown against privileged information being traded, and traded on.
According to a report by the Los Angeles Times, government prosecutors accuse Rajaratnam of earning more than $50m trading on inside information given to him by his sources at some of the biggest corporations in the U.S., including Google, Hilton and Goldman Sachs.
Rajaratnam’s defense team failed to convince the jurors that the “tips” given to the hedge fund manager were already public information and that the success of his Galleon hedge fund was a product of legitimate research.
Defense lawyer John Dowd said Rajaratnam would quickly appeal the verdict.
Many Wall Street insiders believe the unanimous decision against Rajaratnam would send a strong message to hedge fund managers and traders who deal on insider tips. Bill Currier, a former government lawyer who now works at the law firm White & Case told the Los Angeles Times, "Anybody who is engaged in this conduct right now is likely turning it right off.” In a statement released after the verdict, U.S. Attorney Preet Bharara vowed that his office would "continue to pursue and prosecute those who believe they are both above the law and too smart to get caught."
Bharara said, "Rajaratnam was among the best and the brightest -- one of the most educated, successful and privileged professionals in the country. Yet, like so many others recently, he let greed and corruption cause his undoing. The message today is clear -- there are rules and there are laws, and they apply to everyone, no matter who you are or how much money you have."
Sentencing will commence on July 29. Rajaratnam is facing up to 25 years imprisonment but prosecutors say he could get between15.5 and 19.5 years in prison under federal sentencing guidelines. Rajaratnam is free on bail until the sentencing.
Big names dragged into Galleon case
J. Robert Brown Jr, a securities law professor at the University of Denver Sturm College of Law, commented to the Financial Times after the verdict was revealed, “Every reputable company and advisory entity, including investment banks and McKinsey, has got to be horrified by this.”