NEW YORK — A former Wall Street titan was convicted Wednesday of making a fortune by coaxing a crew of corporate tipsters into giving him an illegal edge on blockbuster trades in technology and other stocks — what prosecutors called the largest insider trading case ever involving hedge funds.
Sri Lanka-born Raj Rajaratnam was convicted of five conspiracy counts and nine securities fraud charges at the closely watched trial in federal court in Manhattan. The jury had deliberated since April 25, and at one point was forced to start over again when one juror dropped out due to illness.
Raj Rajaratnam, 53, stared straight ahead and showed no reaction inside Manhattan Federal Court as he was convicted of 14 charges in the largest hedge fund insider trading case ever.
The jury, which found the former hedge fund titan guilty of nine securities fraud counts and five conspiracy counts, began its deliberations on April 25.
Deliberations were forced back to square one at one point when a juror dropped out because of illness.
U.S. Attorney Preet Bharara said the verdict sends a message that white collar laws apply to everyone, "no matter how much money you have."
The defendant "was among the best and the brightest, one of the most educated, successful and privileged professionals in the country," Bharara said in a statement. "Yet, like so many others, he let greed and corruption cause his undoing."
Outside court, with Rajaratnam at his side, defense attorney John Dowd said there will be an appeal filed with the 2nd U.S. Circuit Court of Appeals. Of the 37 trades that the government sought to prosecute, he added, only 14 made it to trial.
The jury heard 45 tapes - a typical prosecution tactic in mob and drug cases, but a rarity in a white-collar trial. In one tape, Rajaratnam and a fellow hedge fund manager discussed the need to cover up a profitable deal.
"I mean, I think this stock could go up $10, you know?" Rajaratnam said to co-defendant Danielle Chiesi. "But we have to keep this radio silence."
"Oh please," Chiesi responded. "That is my pleasure."
Chiesi is one of 21 people who pleaded guilty in the Galleon investigation, with more than two dozen suspects arrested.
Rajaratnam, who faces 19 1/2 years in prison, never took the stand during the trial. Judge Richard Holwell allowed Rajaratnam to remain free on home detention with an electronic bracelet.
The defense said Rajaratnam's astounding success relied strictly on legitimate research and analysis.
No comments:
Post a Comment