Hedge Fund Founder Convicted! Breaking News on ABC
Raj Rajaratnam
Quote:
A former Wall Street titan was convicted Wednesday of making a fortune by coaxing a crew of corporate tipsters to give him an illegal edge on blockbuster trades in technology and other stocks — what prosecutors called the largest insider trading case ever involving hedge funds.
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.
Prosecutors had alleged the 53-year-old Rajaratnam made profits and avoided losses totaling more than $60 million from illegal tips. His Galleon Group funds, they said, became a multibillion-dollar success at the expense of ordinary stock investors who didn't have advance notice of the earnings of public companies and of mergers and acquisitions.
Rajaratnam will remain free on bail, though now with electronic monitoring, at least until his July 29 sentencing.
The verdict came after seven weeks of testimony showcasing wiretaps of Rajaratnam wheeling and dealing behind the scenes with corrupt executives and consultants. Some of the people on the other end of the line pleaded guilty and agreed to take the witness stand against the Sri Lanka-born defendant.
Sri-Lankan born billionaire and co-founder of Galleon hedge fund group Raj Rajaratnam leaves U.S. District Court after jury deliberations in New York, May 10, 2011.Authorities said the 45 tapes used in the case represented the most extensive use to date of wiretaps — common in organized crimes and drug cases — in a white-collar case.
The defense had fought hard in pretrial hearings to keep the avalanche of audio evidence out of the trial by arguing the FBI obtained it with a faulty warrant. Once a judge allowed them in, prosecutors put the recordings to maximum use by repeatedly playing them for jurors.
"You heard the defendant commit his crimes time and time again in his own words," Assistant U.S. Attorney Reed Brodsky said in closing arguments.
"The tapes show he didn't believe the rules applied to him," the prosecutor added. "Cheating became part of his business model."
The wiretaps appeared to play prominently in the jurors' deliberations: They asked to return to the courtroom countless times so they could listen to them again.
The defense argued that the tapes revealed nothing more than that Rajaratnam was doing his duty by asking questions about information already circulating in the "real world" of high finance.
"That happens every day on Wall Street," he said. "There's nothing wrong with it."
Dowd headed a team of attorneys who crowded around the defense table each day. The defendant took an uncustomary position on a bench behind them and listened along with jurors as his voice filled the courtroom.
In one July 29, 2008, call, Rajaratnam could be heard grilling former Goldman Sachs board member Rajat Gupta about whether the board had discussed acquiring a commercial bank or an insurance company.
"Have you heard anything along that line?" Rajaratnam asked Gupta.
"Yeah," Gupta responded. "This was a big discussion at the board meeting."
Prosecutors sought to maximize the impact of the Gupta tape by calling Goldman Sach's chairman Lloyd Blankfein to testify that the phone call violated the investment bank's confidentiality policies. Gupta, who has not been charged, has denied any wrongdoing.
1 | 2 Next Page EmailPrintShareComment & ContributeDo you have more information about this topic? If so, please click here to contact the editors of ABC News. View All Comments (18)tlsim
1:51 PM EDT
May 11, 2011Skagagatha - Who says we don't hold contempt for the Lobbyist? They aren't the subject of this article.tlsim
1:48 PM EDT
May 11, 2011newcountryman - you'll be lucky to get SS. You're no better off than the so called "Liberal Socialists."newcountryman
1:26 PM EDT
May 11, 2011I'll be taking SS next year. I think all you liberal socialists should work lots of overtime.View All Comments (18)
If this subject was posted in another forum or thread, please move it to that. I could not find anything.:judge:
