Jury Finds Rajaratnam Guilty On All Counts
The hedge fund tycoon and Galleon Group LLC co-founder, Raj Rajaratnam, was found guilty on all 14 counts leveled against him in one of the largest insider trading cases ever, according to Bloomberg News. The jury composed of eight men and four women deliberated for 12 days before returning their verdict convicting him of five counts of conspiracy and nine counts of securities fraud. Rajaratnam faces a maximum of 5 years on each conspiracy conviction and a maximum of 20 years on each count of securities fraud, for possibly 205 years in prison.
According to the evidence, Rajaratnam’s conspiracy was based on getting illegal tips from corporate executives, bankers, consultants, traders and directors of public companies, including Goldman Sachs and trading on the inside information. The seven year conspiracy generated $63.8 million in illicit profits for him. The insider trades were made ahead of public announcements about earnings, forecasts, mergers and spinoffs in companies such as Intel, Goldman Sachs, Google, ATI Technologies, Hilton Hotels, Akamai, Integrated Circuit, Xilinx and others. Prosecutors said that Rajaratnam’s sources included Rajat Gupta, who was a director at Goldman Sachs, and Kamal Ahmed, who was an investment banker at Morgan Stanley.
Galleon was one of the biggest hedge funds in the world at one time, managing $7 billion at its peak in 2008. Rajaratnam, who was born in Sri Lanka, was educated at St. Thomas Preparatory School before studying engineering at the University of Sussex in England. He later received his MBA from the University of Pennsylvania’s Wharton School in 1983. In 2009, Forbes Magazine revealed his net worth as being $1.3 billion, making him the 559th richest person in the world.
The success of this case is likely to fuel more such cases by the Manhattan U.S. Attorney’s office using prosecutorial methods once reserved for mob and terrorist cases.