Sun, Nov 29, 2015
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Jury finds Galleon founder Rajaratnam guilty, ex billionaire to face up to 25 years imprisonment

Thursday, May 12, 2011

Opalesque 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
The controversial Galleon trial dragged some of the biggest names in the corporate world and showed cracks in government control. Some of the world’s biggest corporations mentioned during the trial were Goldman Sachs to McKinsey, Moody’s, and IBM.

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.”
- Komfie Manalo

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Other Voices: Hedge fund marketing and the selling cycle[more]

    By Bruce Frumerman. How long is the selling cycle now? That’s a question my financial communications and sales marketing consulting firm has been asked on a regular basis by hedge fund firm owners and sales people, ever since we opened the doors to our firm in 1987 pre-crash. Wa

  2. People - Solus Alternative Asset Management adds chief strategist from BTIG[more]

    From Daniel Greenhaus joined hedge fund manager Solus Alternative Asset Management as managing director and chief strategist. He will work closely with Chris Bondy, Solus’ chief economist, managing director and executive vice president, said Chris Pucillo, CEO and chief investmen

  3. Opalesque Roundtable: Seeding deal terms can be onerous for hedge funds[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: Executives from fund of funds firms, family offices, a placement agent, a private equity firm, and an accounting firm gathered in Connecticut last month for the

  4. Opalesque Roundtable: Family offices flock to co-investment[more]

    Bailey McCann, Opalesque New York: Co-investments have been a hot topic for pension funds in recent years, as they try to move away from high fees and improve transparency. But now, family offices are more readily getting into the mix and establishing in-house deal teams, according to the delega

  5. More institutional investors invest in CTAs compared to last year despite dissatisfaction with performance[more]

    Benedicte Gravrand, Opalesque Geneva: "Despite a strong start to 2015 for CTAs in Q1, commodity market conditions have made return generation difficult for fund managers over much of the rest of the year to date," says Preqin’s November