Guilty on all counts in insider-trading case
Daylife/Reuters Pictures used by permission
Raj Rajaratnam, the hedge-fund tycoon and Galleon Group co-founder at the center of a U.S. insider-trading crackdown, was found guilty of all 14 counts against him in the largest illegal stock-tipping case in a generation.
A jury of eight women and four men in Manhattan returned its verdict today after hearing evidence that Rajaratnam, 53, engaged in a seven-year conspiracy to trade on inside information from corporate executives, bankers, consultants, traders and directors of public companies including Goldman Sachs Group. He gained $63.8 million, prosecutors said.
The trial came as Manhattan U.S. Attorney Preet Bharara promised to crack down on “rampant” illegal trading on Wall Street. Rajaratnam was convicted on five counts of conspiracy and nine counts of securities fraud. Prosecutors today said he faces 15 1/2 years to 19 1/2 years in prison at his July 29 sentencing.
“Rajaratnam, once a high-flying billionaire and hedge fund manager, is now a convicted felon, 14 times over,” Bharara said in a statement after the verdict. “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…”
Galleon was among the 10 largest hedge funds in the world in the early years of the last decade. It managed $7 billion at its peak in 2008. Rajaratnam’s net worth then was $1.3 billion…
The case was the first one focused exclusively on insider trading in which prosecutors wiretapped their targets’ telephone conversations, a tactic used in organized-crime investigations. Jurors heard more than 40 recordings of Rajaratnam, in some of which he can be heard gathering secrets from his sources…
Rajaratnam used inside information to trade ahead of public announcements about earnings, forecasts, mergers and spinoffs involving more than a dozen companies, according to the evidence at the trial. Among them were Intel, Goldman Sachs, Google, ATI Technologies, Akamai and Hilton Hotels…
Rajaratnam’s case was the most prominent amid a widespread U.S. crackdown on insider trading. Bharara, who is directing the nationwide probe, said his office has charged 47 people with insider-trading crimes during the past 18 months, and that Rajaratnam is the 35th person to be convicted.
The Securities Exchange Commission should have been performing this sort of task on a regular basis; but, under years of Wall Street playing pattycake with Republicans and Blue Dog Democrats in Congress questions of oversight and criminal investigation were as unpopular and unlikely as regulation in general. Free market gangsters have been making the rules for decades.
Preet Bahrara was appointed US Attorney by President Obama in 2009. His background is as interesting in some ways as is his dedication to the rule of law and justice. There wasn’t a chance in Hell someone like him would have been appointed under the Clown Prince and Cheney regime.
Watching comments and discussion this afternoon – it’s clear how much of a shock the methods of DOJ investigation have been to the ivory towers of Wall Street.
On the street, whether involved in questions of domestic crime or foreign intrigue, I’ve always assumed the Feds would use every tool at their command. Including illegal means.
It seems that Wall Street gangsters have always been above those considerations. I hadn’t realized that. The biggest shock to these thugs is that they are now being treated as peers of mafioso and drug dealers, their equals in corruption and thievery.
Something I must credit to the Obama Administration. It certainly never happened before – though wiretaps in particular have been used against racketeers for decades. This has scared the crap out of Wall Street.
Eideard
May 11, 2011 at 3:47 pm
As an aside, most of those in charge of the SEC over the years always end up working for a Wall Street firm. The former US Attorney for the District of Southern Manhattan now works for Goldman Sachs along with the former head of the SEC. Did you wonder why no one on Wall Street was ever busted.
At the same time people were complaining against Bernie Maddoff, he was dining with the local SEC supervisors.
Mr. Fusion
May 11, 2011 at 4:39 pm