The fate of hedge fund manager Raj Rajaratnam went to the jury on Monday in Wall Street's biggest insider-trading trial in two decades, a case that featured FBI phone taps and former friends who testified against him. Jury deliberations began just after midday (1700 GMT) on Monday in the Manhattan federal court trial.
Prosecutors accuse Rajaratnam, the founder of the Galleon Group hedge fund, of running a complex web of highly placed tipsters, including hedge fund colleagues and executives at public companies, between 2003 and March 2009. He made $63.8 million illegally, the prosecutors said. The defence countered that Rajaratnam's trades were guided by analysis and public information.
Rajaratnam, 53, is charged with five counts of conspiracy and nine counts of securities fraud for trading on stocks such as chipmakers Advanced Micro Devices Inc and Intel Corp, Internet search company Google Inc and Wall Street bank Goldman Sachs Group Inc. More than 40 tapes of wiretapped conversations were played for jurors in a trial that has lasted nearly seven weeks.
In his instructions to the jury, the last step before deliberations, US District Judge Richard Holwell told jurors to consider the covert recordings in their deliberations, "whether you approve or disapprove" of them. The jury has not been told that Rajaratnam fought unsuccessfully last year to suppress the wiretaps. Holwell also reminded jurors that the government has the burden of proof. "The defendant is never required to prove that he is not guilty," Holwell said. Jurors must be unanimous for a guilty verdict on any count. Rajaratnam stared mostly straight ahead as Holwell instructed the jury, lifting his chin up as the judge prepared to finish.
'HAS TO BE TRUE' Rajaratnam's October 2009 arrest was part of an investigation that prosecutors have described as the biggest probe of insider trading at hedge funds on record. The attention given to the case is reminiscent of the big insider-trading scandal of the mid-1980s involving speculator Ivan Boesky and junk bond financier Michael Milken.
To convict Rajaratnam, the government must convince jurors beyond a reasonable doubt that he received material non-public information from people who had a duty not to disclose it, and that he knew it was wrong. If convicted, Rajaratnam could face up to 25 years in prison.
In the broad Galleon case, 20 out of 26 executives, traders and lawyers charged have pleaded guilty to criminal charges. Three testified against Rajaratnam. Rajaratnam's trial began on March 8. He is the only defendant in the insider-trading probe to go to trial so far.
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